dimanche 22 janvier 2017

British stocks

Recently, François Rochon said in an interview that he thought that the british pound was undervalued by about 18% VS the american dollar. He said that some british stocks looked interesting to him.

Most of the readers of this blog are canadian. So, we don't really care about the difference between US dollar and british pound. We care about the difference between canadian dollar and british pound.

So, what's the difference between the two?

On january 22, 2017, you would have to pay 1,64$ for a british pound.

In 2016, you had to pay 1,80$ for a british pound (average exchange rate as for the years below);
In 2015, you had to pay 1,95$ for a british pound;
In 2014, you had to pay 1,82$ for a british pound;
In 2013, you had to pay 1,61$ for a british pound;
In 2012, you had to pay 1,58$ for a british pound.

So, the average price you'd have to pay for a british pound from 2012 to 2016 is 1,75$. Today, the exchange rate is about 6% lower, which is not a huge bargain. Maybe there's gonna be a better bargain after the Brexit? Who knows.

Anyway, what are the best british stocks? I've been searching a bit on the web and I didn't see that much interesting stocks. It doesn't seem to have much growth in UK these days. So, here's a short list of well known names :

Rolls Royce
BP (British Petroleum)
Rio Tinto
BHP Bilinton
Burberry (high ROE)
Next (high ROE)
Hargreaves Lansdown (high ROE)
British American Tobacco (high ROE)
British Sky Broadcasting (high ROE)
GlaxoSmithKline (usually high ROE, but not now)

My favorite stock in the area of United Kingdom is Accenture, an Irish consulting company with a very high ROE. I've been a shareholder in the past and I really like that stock. Maybe that the Brexit will have some impact on the price of this company in the year ahead, who knows? I prefer that stock to any UK stock in the list above.

Someone is a shareholder of some british stock or is looking at some british stock at the moment? My list isn't that attractive. Probably that someone has something more attractive to talk about.

5 commentaires:

  1. Perpetrator,

    May I add some of the potential ideas to the list?

    ROE-5 year average Trailing P/E
    WH Smith Plc LON:SMWH 80.21% 15.9829
    Howdens Joinery LON:HWDN 61.46% 12.8172
    Dunelm Group plc LON:DNLM 53.16% 13.4

    I owned Howdens Joinery and British American Tobacco for a while but with my distaste for small position, I sold them recently for a small profit. Investing in the Great Britain limits my flexibility since my majority holdings are in Japan, Hong Kong, Singapore and the US. Except a 3% NAV stake in Linamar, which by the way, thanks Penetrator, I stole this great idea from you and I got lucky with my entry point at $47 CAD a share. I hope I could return the favor someday.

    Howdens Joinery designs kitchens for small home builders in the UK, I think I could understand what they do. Though their business is tied to the housing market in the UK. Their average ROE is great. It's price is okay. May warrant further investigation for those who are interested.

    Happy Chinese New Years Bros! I wish you all good fortune and good health! Do you know that this time of year is the New Year in China? Haha, anyway. Whatever.

    The Crazy Asian Investor
    Lui Chun Sing

  2. Besides, it is in my own humble opinion that we're stock pickers, not currency pickers, no one could foresee which direction the Pound will move during the long course of Bre-exit negotiation. In the short run, wild currency swings make a huge impact on our portfolio return, but in the long term, currency moves tend to be a wash, and it's impact on return diminishes as times goes by and become insignificant compared to the return from continued success in stock selection.

    The only caveat is that if you run a concentrated portfolio like our pal Bill Ackman, don't be wrong. I my self dislike over-diversification but I own about 40 stocks, with the minimum position size at 1.5% and the maximum position at 8%. Average position size is about 2.5%. I think this balances risk-management and investment quality well. It is arbitrary, some say 10 stocks already reduces 80% of the risk, some like 20. Suit yourselves, gents.


  3. I own Lloyd's Banking. LYG on NYSE.

  4. By the way BT Group plc (ADR) dropped 20% yesterday, now has a trailing P/E of 11. I don't know enough about the company's account problem in Italy but it seems interesting. I probably won't buy it cos I owned some perfectly good businesses with no legal problems (i.e. IBM)

    And I betrayed my words uttered (or typed) just a few days ago converted 3.7% of NAV (USD cash holdings) to British Pound. I am a dollar bear, Buffett used to be a big dollar bear but now he is all patriotic and shit. With Trump in charge, the national debt and budget deficit will explode and he would like the Dollar to get weaker so that American businesses can export more goods aboard. So I traded a near certain negative outcome for an uncertain outcome.


  5. Thank you Lui Chun Sing for your contribution about that subject.