5 Cool Britannia Stocks to Take Home a Piece of the Royal Wedding
May 18, 2018, 10:22 am
The world is buzzing with excitement over the Royal Wedding between Meghan Markle and Prince Harry this Saturday. I’ll admit it, I’m excited, too, but all this talk about the wedding has gotten me more interested in the UK outperformers that we can trade in the United States while the rest of the world sits to watch the lovebirds say “I do.” Let me share five on my radar with you now.
1. Manchester United (MANU): This is every casual soccer fan’s chance to own a piece of one of the most successful teams in history. Manchester United takes in about $765 million a year from sponsorships, merchandising and broadcast rights. With another traditionally profitable club season behind it, now is the time to build a position while the fundamentals rebuild. Sponsorships roughly pay player salaries, leaving ticket sales to cover other operating costs, while broadcast is arguably the crown jewel. In a good quarter, the rights to show Man U games is worth 15%-20% more than it was a year ago. And if the team does well, the season gets longer and fans buy more gear, covering player bonuses with a healthy margin left over for shareholders. That margin isn’t huge, but it’s ramping up fast – if the coming season is anything like the last one, analysts will be shocked at the amount of profit on the field.
2. BP (BP): Those who remember the company from its Gulf of Mexico meltdown back in 2010 may be surprised to see it now. While BP is still a big player off the Louisiana coast, it also remains the heavyweight in the UK energy landscape. This is one of the few countries on the planet where oil production is rising by roughly 80,000 barrels per day. That’s better than just about anyone else outside the Americas. With new fields opening up in BP’s North Sea turf, that trend can continue. Compare BP’s chart to Exxon Mobil (XOM) and the difference speaks for itself. With oil prices mopping up the last weakness left over from the 2014 crash, the North Sea is a good place to be.
3. IHS Markit (INFO): This is the best proxy U.S. investors have on the resilient British aerospace industry. After all, this is the company that publishes the legendary “Jane’s” guides to weaponry, ships and other defense hardware. However, that’s just one piece of the INFO empire of market data, academic publishing and business-to-business resources. Last year was huge for the company as subscribers in the energy sector made more extensive use of its geological and drilling data. This year I’m looking for slightly less robust revenue expansion but a whole lot more profit. With data providers becoming a trophy for private equity firms with too much investor cash to spend and not enough viable targets, the fundamentals mean a strategic partnership offer isn’t out of the question.
4. Myovant Sciences (MYOV): This is Britain’s best play on endocrine disorders and female infertility, but it will take years to deliver on its scientific promise. Still, with five separate Phase 3 trials currently underway, the finish line could be closer than the investment community on either side of the Atlantic currently suspects. The ultimate goal is curing infertility associated with uterine fibroids, which puts MYOV squarely in the extremely lucrative assisted reproduction space. With the science now just one step away from a final regulatory decision, $130 million in cash should take the company where it needs to be while giving shareholders plenty of upside. In the meantime, the fact that development partners are happy to buy in above $20 provides confidence that if the cash runs out someone will emerge to pick up the pieces. And if the science starts looking too good to ignore, any Big Pharma player may grab the whole company, making MYOV a potential takeover target.
5. Aptiv (APTV): This is the global giant when it comes to car parts, although it t may be more familiar under its old name, Delphi. While the company moved its headquarters to Britain after its 2009 restructuring, it only abandoned the Delphi name back in December when it spun out its powertrain business to concentrate on the components. It’s the business model that made Aptiv a Wall Street powerhouse and now it’s once again ramping profit at a steady 10%-15% per year. Car parts have been one of the strongest areas of the global market, and this is the way to play that theme in pounds. If you’re interested in more, Fiat Chrysler (FCAU) is another good option to consider. It’s a British company now, too, despite its origins in Turin and Detroit.