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In case you haven’t heard, there’s a general election coming. There are plenty of UK stocks out there that could be impacted one way or the other.
The TV at my house has been taken over by Euro 2024, so news coverage around the election and party policies hasn’t been the flavour of the month as much as I’d like. However, the usual promises and challenges arise each time, and I’ve picked three stocks from three sectors that could experience a bump.
The sectors and stocks I’m watching
- Housing. It’s pretty common knowledge that there’s a housing crisis in the UK, and demand is outstripping supply. All major political parties are looking to tackle this deficit, and this could be good news for the UK’s largest residential developer, Barratt Developments (LSE: BDEV). It possesses the profile and brand power to leverage this into increased earnings and investor rewards.
- Defence. Protecting our borders is always a priority, especially in the current day and age, as technology advances and the geopolitical landscape is more complex than ever. Rolls-Royce (LSE: RR.) is the stock to watch here, in my view. It seems to have done a 180 from a couple of years ago under new leadership and now possesses a great order book, a healthy balance sheet, and bright future prospects. Plus, defence spending is at all-time highs, and the firm can continue to capitalise on this to boost earnings.
- Healthcare. You might have heard people complaining about waiting times for doctors appointments and GPs. Well, the state provider is under intense pressure to ease waiting lists and provide new facilities, and update others. Real estate investment trust (REIT) Primary Health Properties (LSE: PHP) could benefit from any policies that support this. It makes money from the NHS as it rents out its properties for GP surgeries and other healthcare provisions.
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No promises!
Let me break down some risks that could impact the stocks mentioned if promises aren’t fulfilled or even addressed.
Firstly, from Barratt’s view, it has two issues to contend with. Higher interest rates and inflation are a worry. The former is making it harder for buyers to get on the property ladder, hurting sales and performance. The latter is sending costs sky high, which means margins are tighter than ever.
Next, Rolls-Royce shares have been flying in recent months and show no signs of slowing. From its view, competition in the sector from players like BAE, as well as resolution of geopolitical conflicts could put a dampener on its upward ascent, as well as returns.
Finally, Primary Healthcare is also at the mercy of economic conditions. Growth for REITs is usually undertaken by borrowing to invest in new assets. When interest rates are high, debt can be costlier, and margins and performance could be dented here. Furthermore, working conditions in the NHS have come under scrutiny recently. With many healthcare professionals leaving the industry, or moving abroad, higher demand for healthcare facilities is all well and good, but if there’s inadequate staff levels to run them, this could hurt the business and earnings.
