The ongoing tariff developments in the US are creating more uncertainty for businesses and the stock market. But a number of UK shares are relatively well-protected from the ongoing developments.
Beyond the FTSE 100 and the FTSE 250, investors don’t have to look far to find some companies with strong competition that have almost no exposure to the US. Two in particular stand out to me.
JD Wetherspoon
JD Wetherspoon (LSE:JDW) runs a chain of pubs in the UK. The stock is up almost 20% since the start of the year, but I still think it looks undervalued.
Over the long term, the firm is aiming to grow its number of pubs from just under 800 to 1,000. This should result in higher profits, but the stock currently trades at a price-to-earnings (P/E) ratio of 14.
The company’s reputation for customer value has seen it perform well recently while other UK businesses have been faltering. The latest trading update revealed like-for-like sales growth of 5.6%.
The prospect of higher staffing costs has been generating a lot of attention recently. And I think this is likely to be an ongoing challenge – I don’t see the National Living Wage going down in future.
I expect this to weigh on JD Wetherspoon’s profits, but the effect on the competition has been much greater. Greene King reported a loss in 2024 and things are even tougher for smaller businesses.
As a result, I still have a positive view of the company’s long-term prospects. And with things moving in the right direction, I think right now could be a very good time to consider buying the stock.
FW Thorpe
FW Thorpe (LSE:TFW) manufactures and sells lighting products for locations like hospitals, road tunnels, and industrial settings. While it does sell products in the US, this accounts for less than 2.5% of total sales.
The firm operates as a decentralised conglomerate. In essence, that’s a slightly fancy way of saying it consists of a number of smaller businesses that each focus on their own specific area.
Industrial lighting is more complex than just fitting lightbulbs or LEDs. Lights in road tunnels and hospitals have to meet certain technical standards and this creates a barrier to entry for competitors.
One reason the stock has faltered recently is that organic growth has been relatively subdued. On top of this, some of the acquisitions the company has made haven’t worked out as anticipated.
That illustrates one of the key risks for investors to note. But after a 23% decline in the last 12 months, I think the current share price might well factor this in.
Since 2020, FW Thorpe has generated £27m per year in free cash flow on average. With an enterprise value of around £283m, that’s a potential return of around 9.5% – I think that’s worth considering.
Tariff protection
JD Wetherspoon and FW Thorpe offer investors a way of blocking out the noise when it comes to US tariff developments. And I think both look like attractive stocks to consider in June.
Both are businesses with important competitive advantages. And while their share prices have been moving in opposite directions recently, they both look like good value at the moment.
