PM’s 5 favorite UK stocks benefit from falling pound

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Last week’s mini-budget, which the new faces at Numbers 10 and 11 Downing Street called a break with old economic orthodoxy, sent the pound plummeting along with many UK stocks. However, Britain is also home to many leading international companies that stand to gain from the growing value of their large overseas revenues.

Using our unique Fix the future database of all stocks held by the world’s top fund managers, we’ve found the five most popular UK stocks that are likely to profit from a falling pound.

As well as being hugely popular with top investors, these five UK-listed companies generate more than two-thirds of their sales overseas.

Astra Zeneca

Astra Zeneca (UK: AZN) tops the charts as holding the UK’s highest conviction for Fix the futureelite fund managers.

The company has recovered under the leadership of Pascal Soriot and has a drug development pipeline full of potential. Only 9% of its revenue comes from the United Kingdom, which is its fourth largest market. Slightly more revenue is generated from Japan, while 16% of sales come from its fast-growing markets in China and 32% from the United States.

As the economic storm clouds darken, Astra also offers the advantage of selling into the notoriously defensive pharmaceutical markets and benefits from the increased need for healthcare driven by increased longevity.

Read our AstraZeneca profile here.

Reckitt Benckiser

The second most popular UK stock with the world’s smartest fund managers is a consumer goods company Reckitt Benckiser (Go: RKT).

A three-year turnaround of the company by chief executive Laxman Narasimhan has attracted top investors, who are sticking with stocks despite his departure to take the top job at Starbucks.

Benji Dawes, who owns the shares of his Premier Miton UK Growth fund, said: ‘[Narasimhan] is not the only architect. Reckitt has a talented team that is able to pursue the strategy.’ Dawes highlights the company’s infant nutrition, healthcare management and pain relief products as proof of its positive contribution to society.

The United Kingdom represents only 6% of sales. The United States is Reckitt’s largest market, generating 29% of sales, while 8% of revenue comes from China and 57% from the rest of the world.

The strength of Reckitt’s healthcare and household brands, which include Lemsip, Gaviscon, Nurofen, Dettol and Clearasil, should help it retain pricing power and support sales during a widely expected global economic downturn. All the same, a tricky economic ride is unlikely to be painless.

Read our profile of Reckitt here.

Shell

Shell (GB: SHEL) is no stranger to fluctuations in stock prices based on market movements over which he has little control. Over the past two years, oil and gas prices have primarily provided substantial support for equities, which have risen sharply on supply shocks caused by the end of lockdowns and Ukraine’s invasion of Ukraine. Russia.

The global energy transition has also led to reduced investment in fossil fuel projects, which could keep market conditions tight for some time to come. According to Ambrose Faulks, elite co-manager of the Artemis UK Select fund, these supply constraints have turned Shell into a “slot machine”. Faulks acknowledges the oil giant could shift to renewables more quickly, but says Shell is doing so at a much faster rate than society in general.

Many investors believe that increased cash generation could lead to a substantial increase in dividends per share, although Wael Sawan, who will succeed Ben van Beurden in January, will have to balance this against investments in the transition to an energy greener.

For Shell, the United Kingdom represents 8% of sales. Its three largest geographic markets are Asia and Oceania at one-third, the United States at 28% and Europe at 22%. However, perhaps more importantly, oil and gas prices are set in US dollars.

Read our Shell profile here.

London Stock Exchange

London Stock Exchange (GB: LSEG) became a data powerhouse last year thanks to its $27bn (£25bn) acquisition of Bloomberg rival Refinitiv. The integration got off to a bumpy start, with some key goals not being achieved. However, over time, investors have had more to celebrate.

Refinitiv also makes the LSE much more international. From 55% of sales in 2021, the UK’s contribution to revenue fell to 31% last year. The United States, meanwhile, went from 19% of sales to become the group’s leading market with 36% of the total.

Despite the specter of recession and weak financial markets, LSE’s business should be helped by the fact that more than 70% of its revenue is recurring and that many of its customers simply cannot live without its products. .

Top sustainable managers are also interested in stocks because of LSE’s efforts to channel money to good causes through products such as its FTSE For Good indices.

“Its products and services are quite economically and socially vital,” says Michael Fox, elite director of the Royal London Sustainable Leaders Trust.

Read our profile of LSE here.

Compass

Covid-19 and lockdowns have been a boon for the restaurant giant Compass (Go: GIC). While the pandemic has led many of the workplace cafes the company runs to close or scale back operations, the shock event has also caused many businesses to outsource catering rather than risk continuing to run their own facilities. This led to a resumption of work for Compass.

The big opportunities for the group are in the United States, which accounts for nearly three-fifths of sales. Continental Europe represents an additional 18%, with the United Kingdom representing only 8% of turnover.

The company also uses its position as a go-to supplier of food products to reduce consumption and preparation waste.

Read our Compass profile here.

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