The nation certainly needs optimism this week, so what better moment to start building our ‘UK Optimist Fund’ of shares with exciting prospects for the post-Brexit era, for which I invited suggestions last week? I’m grateful to all respondents but was particularly glad to hear from former minister Edwina Currie — whose stock picks show a penchant for high dividend yields — and this column’s very own veteran investor Robin Andrews, whose market eye has stood Spectator readers in such good stead over the years.
Our underlying quest is a serious one. We’re heading into new territory in which businesses will clearly suffer if they previously depended on tariff-free access to European markets. But others will thrive if they have strong prospects within the UK, or unique technologies, or growing non-EU export demand that will be boosted by a cheap pound. So our portfolio needs a base of blue-chips with big footprints at home (though some will also have interests abroad) and a second layer of smaller stocks that are potential world-beaters.
Here are ten for the first category. First, Greggs the baker — because we’ll always need pies, or even vegan sausage rolls. Then Lloyds Banking Group (though the brave prefer Barclays), insurer Direct Line and power utility National Grid, which has a quarter of its customers in the US and only a slight risk of confiscation by a Corbyn regime. Also picked were Tesco and Vodafone, as entrenched giants that won’t go away in a hurry, and Stobart for its robust range of infrastructure assets.
From the construction sector, readers chose Barratts the housebuilder, Breedon the brickmaker and Costain the civil engineer, despite its Crossrail entanglement. Finally — a lesser-known cherry for this layer of the trifle — two of you picked Regional REIT, which owns and rents provincial office space and pays divis of 7 per cent plus. A reassuringly solid first selection for a week of turmoil, I think you’ll agree: next week, let’s go for excitement.
This piece first appeared in The Spectator.