Is Brexit a Buying Opportunity?

Published: Oct. 12, 2016, 8:05 p.m.

Welcome to Episode #13 of the Value Investor Podcast Every week, Zacks value stock strategist and the Editor of Zacks Value Investor portfolio service, Tracey Ryniec, talks about all things happening in the value stock universe, including her top stock picks. This week, Tracey discusses how value investors need to look for buying opportunities. Value investors buy in industries and sectors everyone else is scared of. Fear is the value investor’s friend. Right now, one of the most fearful parts of the global economy is in Great Britain. The Brexit vote is continuing to have investment ramifications as questions swirl about whether it will be a difficult separation or not. The British pound just suffered one of the top 40 worst 4-day periods in its history, as it fell nearly 5%. It is at 1985 lows. A value investor might ask: are British stocks being hit just as badly? And if so, are there some buying opportunities there? Tracey looks at the ways you can get into the game including through buying British companies that are trading on the US stock exchanges as well as through buying country-specific ETFs. The ETFs give you more diversified exposure. Are British Stocks on Sale? 1. GlaxoSmithKline (GSK) has a forward P/E of 16.7. It also pays a dividend yielding 4.6%. 2. AstraZeneca (AZN) is trading with a forward P/E of 15.5. Shareholders are rewarded with dividends yielding 4.3%. 3. British American Tobacco (BTI) isn’t very cheap. It has a forward P/E of 19. Tracey is also keeping a couple of stocks on her “watch” list. Which ones does she think have potential? What About Country ETFs? 1. iShares United Kingdom ETF (EWU): specializes in mid-and-large cap companies. Only down 3% on the year. 2. iShares United Kingdom ETF (EWUS): focuses on 240 small cap companies. It is down 12% year-to-date. Tracey believes there is a buying opportunity in one of these. Which one does she like? Check out this week’s podcast to find out what values may lurk in the British Isles. ISHARES MSCI UNITED KINGDOM ETF: https://www.zacks.com/funds/etf/EWU/profile?cid=cs-soundcloud-ft-podISHARES MSCI UK SMALL CAP INDEX FUND: https://www.zacks.com/funds/etf/EWUS/profile?cid=cs-soundcloud-ft-pod Glaxosmithkline:https://www.zacks.com/stock/quote/GSK?cid=cs-soundcloud-ft-pod Astrazeneca Plc: https://www.zacks.com/stock/quote/AZN?cid=cs-soundcloud-ft-pod British Am Tob: https://www.zacks.com/stock/quote/BTI?cid=cs-soundcloud-ft-pod Follow us on StockTwits: stocktwits.com/ZacksResearch Follow us on Twitter: twitter.com/ZacksResearch Like us on Facebook: www.facebook.com/ZacksInvestmentResearch