Weâre a little over a month away from when Conservative Party members will select the next leader of their party, and by extension the next prime minister of the United Kingdom, on July 22.
The well-trodden maxim is that a week is a long time in politics, but in the Brexit-dominated political cauldron, seven days can be described more like an entire era. Even so, it would take a braver man than me to bet against Boris Johnson strolling into Number 10 late next month. Bookmaker Ladbrokes currently puts the member of parliament for Uxbridge and South Ruislip at a staggering 1/6 to replace the much-maligned Theresa May.
So what stocks do I think you should buy (and sell) in the event of Johnson becoming the next PM?
Go defensive
One good idea would be to load up on defence stocks, in my opinion.
Industry giants like BAE Systems (LSE:BA) are perfect buys for this moment in time given their popularity in challenging macroeconomic and worrying geopolitical times like these, their popularity reflecting the resilient demand for their products, whatever the weather. And Borisâs likely ascension to the political summit could give them a further dose of rocket fuel.
Why? Well in February he contributed to a report calling for the UKâs foreign aid budget to âdo more to serve the political and commercial interests of the country.â This could see the cost of military peacekeeping missions come out of the international aid pot and free up extra cash for the Ministry of Defence.
But BAE Systems isnât the only stock that could fly, of course. Meggitt, Avon Rubber and Ultra Electronics could also pick up some momentum in the weeks ahead.
Water way to fall
Whether youâre a fan or a critic of Boris, few would argue that heâs the most polarising political figure in the leadership contest right now, if not the whole of Westminster. Thereâs no shortage of people in his own party who despise the fellow, after all, from ministers who have vowed never to serve in a Johnson cabinet (like international development secretary Rory Stewart), to backbenchers (like the influential Dominic Grieve) who have pledged to leave the party altogether.
Itâs not a shock to see many inside and outside the SW1 bubble predicting that the government could collapse within weeks of him entering Downing Street. And with that comes the prospect of a Jeremy Corbyn government and an overhaul of the utilities sector.
So what would I not buy now? The policies of the modern Labour Party have already brought Centrica and SSE into the crosshairs, reflecting the intensifying criticism of the big dividends on offer for shareholders in these firms when families are really feeling the pinch.
National Grid has more recently been targeted very publicly by the Queenâs official opposition, and while the water companies like Pennon Group and United Utilities may not have commanded the sort of column inches that the electricity providers have, they also face the prospect of re-nationalisation under a Corbyn administration. And possibly below market value, too.
Part Two of this article will follow on Wednesday, June 19.