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World Cup Success, GDP Growth Boost U.K. Economy: 5 Picks

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The FIFA World Cup in Russia witnessed many surprises this time, including the defending champion Germany’s early exit. While some other favorites followed suit, team England gave a stunning performance, its best since the 1990 World Cup. A great world cup season helped boost U.K. stocks considerably. Additionally, Bank of England said that this World Cup will actually help Britain overcome the Brexit-related tensions.

In addition to the optimism over the World Cup, recent economic data for the United Kingdom is upbeat, with solid increase in retail sales in June. In May, U.K. GDP increased steadily after the Services Purchasing Managers’ Index (PMI) reached its best levels since last October in June. Following these developments, investing in British companies that are expected to gain from the World Cup and strong GDP data looks like a prudent investment option.

FIFA World Cup Brings Ample Gains For U.K.

The United Kingdom, known as England in the World Cup, last won the coveted title way back in 1966. After that, the country reached the semis for the first time in 1990. Clearly, the country had to wait another 28 years to reach the semi-finals in this tournament.

Following this development, in June, consumers invested significantly in barbecues, beer and big-screen televisions, which in turn boosted retail sales. In June, retail sales advanced 2.3% year over year, as per data by the British Retail Consortium (BRC).

Retail sales have registered its second-best rise this year on the back of a steady rise in consumer spending. According to Barclaycard, overall consumer spending advanced 5.1% after spending in restaurants and pubs climbed around 10% in June. Also, BRC said that the “like-for-like sales” are up 1.1% year over year.

World Cup Soothes Brexit-Induced Worries

On Jul 5, Bank of England’s (BOE) Governor Mark Carney showed his optimism over England’s success in the World Cup. Carney said that England winning the 2018 soccer title on Jul 15 in Moscow, will be an “unadulterated, unalloyed good” for the economy of the country.

World Cup joys come at a time when the United Kingdom is reeling under Brexit-related tensions, when Britain’s Foreign Secretary Boris Johnson and Brexit minister David Davis have resigned. This has raised prospects of a new election and pushed Brexit negotiations into murkier waters.

Separately, per the British Beer and Pub Association, additional sales of beer following the World Cup will bring around £4.5 million in the form of tax collections. Pub retailers like Greene King have already stated that it sold an additional 500,000 pints during the match between England and Panama. Some other pub operators like Marston and EI Group are also expected to gain from England reaching the semis.

Britain’s GDP Rise & Services PMI Shine in June

According to the National Institute of Economic and Social Research, Britain’s GDP growth for the month of May was 0.3%, better than April’s 0.2% rise. May’s GDP growth led the economic growth to 0.2% during March-May period, higher than February-April’s 0% increase. Strong services sector performance boosted the GDP for the three months ended May.

IHS Markit/CIPS services PMI rose from 54 in May to 55.1 in June. The country’s non-manufacturing activity not only expanded last month, but also reached its highest settlement in the last eight months. Overall services activity increased 0.4% in the second quarter.

5 British Stocks to Buy Now

With England sailing through the quarterfinals and now geared up to face Croatia in the second semi-final, U.K. clearly has a lot more to gain. Additionally, strong retail sales and steady economic growth will help British companies to gain significantly. This along with strong services activity in the country is definitely good news for investors and makes British stocks wise investment choices.

In this context, we have selected five British stocks that are expected to gain following these developments. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BP plc (BP - Free Report) is involved in energy business all over the world.

This London-based company has a Zacks Rank #1. The expected earnings growth rate for the current year is 77.66%. The Zacks Consensus Estimate for the current year has improved 6.7% over the last 30 days. BP has gained 34.9% in the past year.

Aptiv PLC (APTV - Free Report) is a manufacturer of vehicle components and provider of safety technology solutions to the global automotive and commercial vehicle markets.

This Dublin-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 15.79%. The Zacks Consensus Estimate for the current year has improved 0.2% over the last 30 days. Aptiv has gained 25.3% in the past year.

Atlantica Yield plc (AY - Free Report) is a manager of renewable energy natural gas, power, electric transmission lines and water assets.

This Brentford-based company has a Zacks Rank #1. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 26.1% over the last 60 days. Atlantica Yield has gained 4.6% in the past year.

Mimecast Limited (MIME - Free Report) is an email and data security company.

This London-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 93.4% over the last 60 days. Mimecast has gained 54.1% in a year.

Tullow Oil plc (TUWOY - Free Report) is involved in the oil and gas exploration, development, and production activities.

This London-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 61.11%. The Zacks Consensus Estimate for the current year has improved 15.4% over the last 30 days. Tullow Oil has gained 61.1% in a year’s time.

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