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6 Foreign Stocks to Buy for the Post Brexit Era

Zacks

Britain’s post Brexit resilience seems to be fading. A new survey from Ernst & Young LLP released last week reveals that the country has fallen below the first five slots on the list of the top locations for doing business. For the first time in seven years, Britain finds itself ranked below the likes of China, Germany, Canada and France.

The U.S. heads the list, but at a time when domestic markets seem slightly troubled, it may be a good idea to look at options overseas. Adding stocks from other countries ranked higher on this list may be a smarter move now.

Britain’s Business Attractiveness Fades

Ernst & Young’s Global Capital Confidence Barometer has surveyed 1,700 executives across 45 counties. According to the report, the top five investment destinations for mergers, acquisitions and deals activities are the U.S., Germany, Canada and France. Britain features lower on the list, at number seven, primarily due to the impact of the surprise Brexit vote.


According to E&Y, Brexit has caused several geopolitical changes which have made cross border investments even more complex. Additionally, the volatile nature of exchange rates has also dulled the enthusiasm for deal making. Since the vote took place in June, the pound has lost nearly a fifth of its value versus the dollar.

Meanwhile, economic forecasting group EY Item Club has said that Britain’s resilience post Brexit was largely “deceptive”. According to the group, inflation will rise to 2.6% next year, causing consumer spending to decline from the projected 2.5% this year to 0.5% in 2017. Meanwhile, doubts over Britain’s economic ties with the EU after Brexit will result in a drop in confidence among companies, bringing down business investment.

China, Canada, France Emerge as Better Options

It’s not that the economies of China, Canada and France are in the pink of health. But they seem to be dealing with their problems more effectively and are not facing the kind of uncertainty that may plague Britain post Brexit.

For instance, revised estimates released last month showed that France’s economy contracted by 0.1% during the second quarter, rather than remaining stagnant as was earlier estimated. However, the composite, marketing and services PMIs all came in above expectations, reducing the impact of this release to a significant extent.

In Canada’s case, GDP growth exceeded expectations in July due to the resumption of oil production in Alberta. The region’s oil companies had been affected by wildfires and total output for the country increased by 0.5% as they reopened their facilities.

Meanwhile, market watchers widely believe that China’s GDP will come in at 6.7% for the third quarter. This is consistent with the pace experienced during the first two quarters. Premier Li Keqiang said recently that economic performance in the third quarter had exceeded expectations and risks generated by debts were currently on a leash.

Our Choices

As the impact of Brexit finally sets in, Britain’s attractiveness as a business destination seems to be falling substantially. Meanwhile, other developed countries have emerged as more favored destinations for corporate investors.

A closer look at the economies of France, China and Canada reveals that they may be better economies to invest in. Picking stocks from these countries seems to be a smart choice at this point. We have narrowed down our search based on a good Zacks Rank and other relevant metrics.

Alibaba Group Holding Limited BABA is an e-Commerce giant which caters mainly to its native market. The company operates as a platform for third parties and does not sell goods directly to merchants or hold inventory.

Alibaba has a Zacks Rank #1 (Strong Buy) and its projected growth for the current year is 29.1%. Its earnings estimate for the current year has improved by 0.4% over the last 30 days.

SINA Corporation SINA is a leading provider of online media and value-added information services to global Chinese communities.

SINA has a Zacks Rank #1 and its projected growth for the current year is 43.8%. Its earnings estimate for the current year has improved by 7.5% over the last 30 days.

Orange ORAN is a Paris-based provider of telecommunications, data transmission and value added services.

Orange’s projected growth for the current year is 29.4%. Its earnings estimate for the current year has improved by 1.9% over the last 60 days. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AXA SA AXAHY is a Paris-based international group of insurance and related financial services companies.

AXA has a Zacks Rank #2 and its projected growth for the current year is 12.2%. Its earnings estimate for the current year has improved by 1% over the last 30 days.

Avino Silver & Gold Mines Ltd. ASM is a Vancouver, Canada-based company engaged in exploration and development of mineral properties.

Avino has a Zacks Rank #2 and its projected growth for the current year is more than 100%. Its earnings estimate for the current year has improved by 16.7% over the last 30 days.

Pan American Silver Corp. PAAS is a Vancouver, Canada-based mining company focused exclusively on silver.

Pan American Silver has a Zacks Rank #2 and its projected growth for the current year is more than 100%. Its earnings estimate for the current year has improved by 25% over the last 30 days.

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