3 stocks I’d buy if Brexit falls through

The future of Brexit is uncertain. Here are three stocks I think will skyrocket if it falls through.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Ever since Britain voted to leave the European Union, the UK stock market has been a bit confused. We don’t exactly know how Brexit could negatively impact stocks and many investors are reluctant to spend their money until the storm has blown over.

The potential for a second referendum really does appear to be on the cards, which could mean that we end up remaining after all. I believe cancelling Brexit will lead to some stocks skyrocketing, here’s why I will invest in these stocks right away if we remain.

Flying high

easyJet (LSE: EZJ) is the first company that I would have my eye on if Brexit were to be cancelled. The dark cloud of the EU exit has been hanging over the company recently, with net losses quadrupling in the first half of this year to £218m.

However, things could be looking up for this discount airline if the government (or a future government) were to do a U-turn. It would benefit from the higher pound and lower fuel costs if Brexit were to disappear, which should result in higher demand for the company’s services.

Furthermore, it relies on short-haul flights, predominantly from the UK to other EU countries. If Brexit happens, the company would have to take a closer look at its ownership structure to ensure that it could even keep serving EU customers. easyJet has already set up an operation in Austria to counteract this, but the transition certainly wouldn’t be quick and easy. 

Banking on it

Lloyds (LSE: LLOY) shares have dropped 10% since June 2016. If the looming Brexit was no longer in the picture, The Bank of England’s guidance has hinted that interest rates would immediately be increased. This would benefit Lloyds and could help to increase the share price in the long run. 

With a dividend yield of 5%, this stock isn’t a bad deal at the moment and even if Brexit were to go through, it could be a boost for the bank as it’s the uncertainty that’s damaging the financial sector at the moment. 

CEO Antonio Horta-Osorio acknowledges that Brexit brings problems but remains upbeat. He said: “While Brexit uncertainty persists, and continued uncertainty could further impact the economy, I remain confident that our unique business model… will continue to deliver superior performance and returns for our customers and shareholders.”

I will definitely be keeping an eye on Lloyds in the coming weeks/months as we hopefully begin to see more certainty surrounding Brexit.

Eating out

The Restaurant Group (LSE: RTN) is the last (but definitely not least_ on my post-Brexit-cancellation radar. Dining chains have been stretched and challenged by the increasing popularity of online delivery apps, let alone Brexit.

However, it acquired popular Asian-themed chain Wagamama to add to its group last year, with the hope of turning things around. If Brexit were to be cancelled, the Restaurant Group could potentially benefit. Food price inflation could be capped thanks to sterling growing stronger and a pool of young and affordable labour would be readily available from the EU.

The weak pound and labour tightening meant that wages and cost of ingredients added a whole £17 million to expenses in 2018. If Brexit falls through, the Restaurant Group has the opportunity to rise above these challenges and have more money to spend elsewhere.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

fional has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Google office headquarters
Investing Articles

1 reason I like buying S&P 500 shares – and 1 reason I don’t

Will this investor try to improve his potential returns by focusing more on S&P 500 shares instead of British ones?…

Read more »

Young woman holding up three fingers
Investing Articles

3 SIPP mistakes to avoid

Our writer explains a trio of potentially costly errors he tries to avoid making when investing his SIPP, on an…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Here’s how (and why) I’d start buying shares with £25 a week

Our writer uses his investment experience and current approach to explain how he would start buying shares on a limited…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s my 5-step approach to earning passive income of £500 a month

Christopher Ruane explains the handful of steps he uses to target hundreds of pounds in passive income each month.

Read more »

Investing Articles

2 UK shares I’ve been buying this week

From a value perspective, UK shares look attractive. But two in particular have been attracting Stephen Wright’s attention over the…

Read more »

Investing Articles

A lifelong second income for just £10 a week? Here’s how!

With a simple, structured approach to buying blue-chip dividend shares at attractive prices, our writer's building a second income for…

Read more »

Investing Articles

Here’s how I’d use a £20k Stocks and Shares ISA to help build generational wealth

Discover how our writer would aim to turn a £20k Stocks and Shares ISA into a sizeable nest egg by…

Read more »

Investing Articles

Billionaire Warren Buffett just bought shares of Domino’s Pizza. Should I grab a slice?

Our writer takes a look at a few reasons why Domino's Pizza stock might have appealed to Warren Buffett's Berkshire…

Read more »