It’s rumoured David Cameron’s a bit busy at the moment. I don’t suppose he’s looking at stocks for his investment portfolio, but there are plenty of interesting opportunities out there.
Here are the reasons (some serious; some a little less so!) why I think Mr Cameron — and you — might want to consider buying shares in GlaxoSmithKline (LSE: GSK), BP (LSE: BP), Vodafone (LSE: VOD), HSBC (LSE: HSBA) and Burberry (LSE: BRBY).
GlaxoSmithKline
Mr Cameron formed a Business Advisory Group when he got into Downing Street five years ago. Membership of this select group is by personal invitation, and the Prime Minister considers members to be “some of Britain’s leading business men and women”.
Andrew Witty, chief executive of GlaxoSmithKline, is one of the chosen few, so it would seem logical for Mr Cameron to consider buying shares in the pharmaceuticals giant. The company has been battling through a period of patent expiries on some of its leading products. But, with earnings expected to start picking up again next year, and a dividend yield of over 5%, GSK seems an attractive investment, particularly for those seeking income.
BP
Mr Cameron, who waded into battle on behalf of BP after the Gulf of Mexico oil spill in 2010, has now told the company that the UK government would resist any potential foreign takeover of the business.
The Financial Times observed: “BP shareholders have paid for the right to determine the company’s future. The government has not”. The FT has a point. Perhaps now would be a good time for Mr Cameron to buy some BP shares. He could be getting a good deal, too, because the shares, which yield 5.5%, are over 10% below their 52-week high, and could deliver strong returns when the oil price moves higher from its current subdued level.
Vodafone
Mr Cameron seems to like Vodafone. Perhaps the fact that Vodafone UK’s headquarters is in his childhood hometown of Newbury has something to do with it. We’ve seen him popping into HQ to congratulate “this great British success story” for creating new jobs, throwing his weight behind the company in a dispute with the Indian government over a tax liability, and telling us he’s a customer of Vodafone, despite the poor signal he gets when holidaying in Cornwall.
Furthermore, Vodafone chief executive Vittorio Colao is another member of Mr Cameron’s elite Business Advisory Group, and Vodafone is another blue-chip giant currently yielding over 5%.
HSBC
Mr Cameron’s forebears have a long history in finance, but which financial stock would be an appropriate selection for his portfolio. His father, grandfather and great-grandfather were all partners in stockbrokers Panmure Gordon, but this AIM-listed company is a bit on the small side. A great-great-grandfather was the director of the Chartered Bank of India, Australia and China which later became Standard Chartered, but this bank is struggling and in the midst of boardroom changes.
Another of Mr Cameron’s great-great-grandfathers was the London head of the Hongkong and Shanghai Banking Corporation, now HSBC. The UK’s only truly global bank, HSBC seems good value on a low price-to-earnings ratio and with a dividend yield of 5.3%.
Burberry
Mr Cameron’s wife, Samantha, is an ambassador for the British Fashion Council, and is often seen dressed head-to-toe in the best of British labels. Investors who buy a minimum of 250 shares in luxury handbags firm Mulberry are entitled to a 20% discount on up to £5,000 of product per annum. However, the company issued a string of profit warnings last year, and has seen more than its fair share of upheavals and boardroom changes over the years.
Iconic British fashion house Burberry appears a safer bet. While it doesn’t boast the shareholder perks of Mulberry, or the high yields offered by GlaxoSmithKline, BP, Vodafone and HSBC, Burberry has been growing earnings faster than many companies. City analysts are expecting double-digit annual increases for the next two years.
