Zacks.com Featured Highlights: Carnival, BT Group, BHP Billiton And National Grid

For Immediate Release

Chicago, IL – June 22, 2016 - Stocks in this week’s article include: Carnival (LON:CCL) plc (CUK), BT Group (LON:BT) plc (BT), BHP Billiton (LON:BLT) plc (BBL) and National Grid (LON:NG) plc (NGG).

Screen of the Week of Zacks Investment Research:

Buy These 4 Stocks that Shot Up as Brexit Fears Diminished

Stock markets around the world rallied on Monday as polls showed support swinging in favor of the U.K. remaining in the European Union (EU) ahead of the referendum. This came as an encouraging news as the possibility of a Brexit had intensified in earlier polls, which raised concerns about bouts of volatility and U.K. sinking into a recession.

Such concerns are now put on the backburner. Subsequently, the quality of trade that Britain has with the rest of the world and its entrepreneurship will not stand to lose as the prospect of a British exit from the EU looks to be on the wane. This calls for investing in British firms that have a considerable exposure globally including the EU. Such firms also saw their share price move north following pro-Bremain polls.

Bremain Momentum Lifts Stocks

The possibility of a U.K. exit from the EU had weighed on stocks in recent trading sessions, dragging the Dow down 1.1% last week, the index’s biggest weekly decline in more than a month. But, weekend polls showed a swing to “remain” in the run-up to the Brexit vote, which eventually sent stocks higher on Monday, with 9 out of 10 sectors of the S&P 500 ending in the green. Investors’ anxiety about the uncertain consequences of a Brexit ebbed as the “remain” side recovered lost ground.

This was not only confined to the U.S. Stocks across the globe climbed as investors piled into riskier assets and abandoned safe havens such as government bonds and gold. The Stoxx Europe 600 advanced 3.6%, its largest gain since August, with bank shares in the index gaining 4.5%. Investors had shunned European bank shares earlier as a leave could have adversely affected banks’ funding costs and profits. Among the other European exchanges, Britain's FTSE 100, Germany's DAX and France's CAC 40 leaped 2.9%, 3.4% and 3.3%, respectively, yesterday.

Scales Swing for Bremain

Among the notable weekend polls, Survation poll for The Mail showed 45% in favor of the U.K. remaining in the EU, while 42% was in favor of leaving. This is in contrast to a previous survey conducted by Survation, which had put support for a Brexit ahead by 3 points. Another survey by YouGov for the Sunday Times showed 44% was in favor of “remain” and 43% supporting “leave”. Bookmakers including Betfair and Ladbrokes (LON:LAD) also forecast a 73% chance that Brits will opt to stay in the EU.

One wonders whether it was the death of the British politician Jo Cox, an active pro-EU campaigner, responsible for swinging the vote in favor of Bremain? Anthony Well, director of YouGov’s political and social research team, begs to differ. He said that “While there will be speculation about whether this movement is connected to the tragic death of Jo Cox, we do not think that it is.” He added: “The underlying figures suggest the movement may be more to do with people worrying about the economic impact of leaving the EU.” And we also believe there is more weight in this argument.

Benefits Europe Brings to Britain’s Business

Spanning across 28 countries and encompassing more than 500 million consumers, the EU has played an important role in shaping Britain’s economy. Access to a single market has helped British firms export and expand their business. About 75% of British firms that trade goods globally do so with the EU. An exit will push Britain’s economy into a recession, resulting in a drop of 3.6% in GDP and around 500,000 job cuts. Financial services will be largely affected as it accounts for almost 10% of the U.K’s economic activity.

U.K. may lose other essential benefits including free movement of goods, services, capital and people. The ‘leave’ camp does argue that the U.K. will be able to negotiate better trade deals if it isn’t a part of the single market. However, this may not be likely as, once outside, U.K. won’t be able to tweak or play a significant role in influencing the laws of the single market.

British Prime Minister David Cameron in an interview with the Observer had already cautioned that a potential Brexit will adversely affect British spending on healthcare. He forewarned that Brexit will dry up around 40 billion pounds in U.K. public finances by 2020. Lest we forget, Britain as a part of the EU was able to expand at an average of 1.8% annually for the past four decades, ahead of Germany’s 1.7% and France’s 1.4%.

Brexit Worries Wane: Buy These 4 Stocks Now

Thanks to the latest pro-Bremain polls, concerns about U.K.’s exit from the EU and the potential damage it will have on its economic growth, jobs, investment and trade abated. Banking on this optimism, British firms having significant exposure to the EU and the rest of world will stand to gain the most.

We have selected four such British firms whose shares have jumped yesterday as Brexit fears diminished. Such stocks are also fundamentally solid as they boast a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy). Additionally, we have narrowed down our search with a VGM score of ‘A’ or ‘B.’ Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners.

Carnival plc (CUK) operates as a leisure travel and cruise company across the globe including the Europe. CUK is headquartered in Southampton, the United Kingdom. CUK has a Zacks Rank #2 and a VGM score of ‘A’. Shares of CUK gained 2.4% yesterday.

BT Group plc (BT), headquartered in London, provides communications services worldwide. BT has a Zacks Rank #1 and a VGM score of ‘A’. Shares of BT soared 6.2% yesterday.

BHP Billiton plc (BBL), based out of London, operates as a resources company that discovers, acquires, develops and markets natural resources in various parts of the world including Europe. BBL has a Zacks Rank #2 and a VGM score of ‘B’. Shares of BBL advanced 3.2% yesterday.

National Grid plc (NGG) is an international electricity and gas company based in London. NGG has a Zacks Rank #2 and a VGM score of ‘B’. Shares of NGG increased 2.5% yesterday.

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