I’ve written extensively on why I believe a ‘no-deal’ Brexit remains (among the hardest of leave supporters, that is) the stuff of fantasy.
Exiting the European Union without an agreement would be the meteorite that smashes the political landscape in the UK to smithereens and puts the domestic economy in severe long-term jeopardy, and for this reason I’ve stuck to my guns in recent months and talked down the chance of a disorderly Brexit actually transpiring.
I still believe that leaving the European bloc under a ‘no-deal’ scenario is the least likely outcome, but only marginally so now.
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The Westminster stalemate is unlike anything we’ve seen in peacetime and it doesn’t appear set to be resolved any time soon. In fact, the chances of us slipping out without a deal on 11pm on Friday, March 29 have increased in recent days, first through speaker John Bercow’s decision to stop Meaningful Vote III happening, and increasingly-frosty rhetoric from many of the EU’s other 27 states on the prospect of any sort of Article 50 extension.
A Brexit beneficiary
There’s still a long way to go in the days ahead, but with the situation as cloudy as ever, nothing can be presumed. I think it’s safe to say that either an extension to Article 50 or a disorderly Brexit are the only games in town, though, and thus the uncertainty that’s proving increasingly problematic for the UK economy is set to last for some time yet, whatever happens from here.
For this reason I think that buying up Begbies Traynor Group (LSE: BEG) may be a wise bet. The corporate insolvency specialist is already thriving in this environment and there’s little reason to expect it to change.
Full quarterly financials from the AIM-quoted firm saw it citing Insolvency Service data showing the number of corporate insolvencies soaring to 16,090 in 2018, up 10% year-on-year as uncertainty over Brexit smacked business. To put this into context, this represents one in every 242 companies experiencing severe financial distress. It’s no surprise then that Begbies Traynor said that it has experienced “revenue and profit growth for the year to date.”
Big dividends
It should also come as hardly a shock that City analysts expect profits growth at the business to go from strength to strength, reflecting these fertile trading conditions as well as the firm’s rich appetite for acquisitions. A 12% earnings rise is predicted for the 12 months to April 2019, a projection that improves to 16% for the following fiscal period.
And these bright projections give plenty of other reason to celebrate. Firstly they make Bergbies Traynor a bargain at current prices, the firm carrying a dirt-cheap forward P/E ratio of 13.4 times. Secondly, they mean that City analysts are anticipating more dividend growth, from the 2.4p per share reward of last year to 2.6p this year and 2.8p in fiscal 2020. Such figures yield a fatty 4.3% and 4.6% and make the business a great income share to buy, in my opinion, and particularly for those who are especially fearful over Brexit.
