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Hargreaves Lansdown’s 10 stocks to watch after a Labour victory

24 June 2024

A Labour government might be priced in but some UK stocks could have further to run under a new administration.

By Gary Jackson,

Head of editorial, FE fundinfo

Lloyds, Taylor Wimpey and JD Wetherspoon are among the stocks that could benefit from a Labour victory at the looming general election, according to analysts at investment platform Hargreaves Lansdown.

The UK will go to the ballot box on Thursday 4 July, with the polls showing the Labour party likely to win by a considerable majority. While investors are not expecting this to spark a strong market reaction, there might be some key beneficiaries.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “While the nation appears to have become obsessed by politics during the general election campaign, the impact they have on financial markets is likely to stay more minimal – especially Britain’s blue-chip index, given its international focus.

“The Labour party has been ahead in the polls for many months and has widened its lead. There could be a tailwind for certain sectors and stocks if the expected result turns up even though a win for Keir Starmer has largely been priced in.”

Below, we look at 10 stocks that Hargreaves Lansdown thinks might be among those that do well under a Labour government.


Housebuilders: Taylor Wimpey and Vistry

First up, Streeter pointed to Labour’s pledge to shake up the planning system and fast-track urban brownfield sites for development, in the hope of building 1.5 million new homes.

This would help housebuilders such as Taylor Wimpey, which have been hampered by slow approvals of projects and higher interest rates. However, rate cuts appear to be on the horizon while a promise to extend the mortgage guarantee scheme should bolster demand

A Labour administration’s expected emphasis on constructing more affordable housing would also be beneficial for Vistry, which partners with housing associations to provide affordable housing.

“Although these projects tend to be lower margin, if they can be approved in greater volumes it bodes well for its business model,” Streeter said. “Partnership revenues are typically more defensive than those from ordinary housebuilding operations. The need for more affordable private and social housing shows little sign of going away even if the economy doesn’t improve significantly.”


Construction: Balfour Beatty

Meanwhile, construction contractors such as Balfour Beatty stand to benefit from pledges to improve roads, schools, hospitals and other elements of national infrastructure. The public sector accounts for more than 95% of future orders in Balfour Beatty’s UK business and the impact of a government-led infrastructure boost would be significant.

But investors need to keep in mind that some of its projects have been delayed because of higher borrowing costs, mainly in the US, which could continue to hamper the wider business if interest rates remain higher for longer, according to Hargreaves Lansdown.


Banks: NatWest and Lloyds

The pledges of funding for infrastructure could also lead to a modest boost in GDP, Streeter argued, which may help UK-focused banks such as NatWest and Lloyds.

“NatWest has been showing signs of promise with loan default levels remaining low and with the return of real wage growth, plus an improving housing market, borrowers look set to remain resilient,” she added. “If the economy does continue to recover as expected, this trend should help put NatWest in a more resilient position, especially with easing conditions in the mortgage market appearing.”

She described Lloyds as “another piece of the unloved banking sector”, but said this bank – which is often seen as a bellwether for the UK economy – would also benefit from the improved consumer confidence that would follow a change in government.


Bricks & mortar store chains: Associated British Foods and J Sainsbury

Labour’s plan to overhaul the business rates system would support high street operators by levelling the field between bricks & mortar chains and online giants such as Amazon.

Chains with large footprints in town and city centres such as Primark owner Associated British Foods (which has not gone down the online-only sales route) and supermarket giant Sainsbury’s (where the pandemic’s surge in digital sales has reversed) could benefit from this change.

“If a Labour win is accompanied by a confidence lift, caused by optimism brought by the winds of change, it could also help consumer sentiment and provide a tailwind,” Streeter said.


Health: Primary Health Properties

Another stock to watch in a Labour victory is Primary Health Properties (PHP), which is a real estate investment trust that provides purpose-built doctor's surgeries. It would benefit from the stable growth environment created by pledges to add another 2 million appointments to the healthcare system and recruit another 8,500 staff, specifically to work in mental health.

“PHP has successfully navigated the era of higher interest rates even though it’s had an impact on the value of the portfolio,” Streeter said. “The company has focused on squeezing more from existing locations and, with more demand expected at bricks & mortar properties amid a lack of new supply, this has given PHP more bargaining power in terms of rent increases. With investment in primary care facilities also likely to increase, PHP is well placed to benefit from further opportunities.”


Pub companies: JD Wetherspoon and Mitchells & Butlers

Finally, Hargreaves Lansdown highlighted JD Wetherspoon and Mitchells & Butlers as hospitality stocks that would benefit from Labour’s promised business rates reforms, while the proposed establishment of Great British Energy could also help keep energy costs down.

“JD Wetherspoon’s Tim Martin has long been a vocal campaigner for tax parity between supermarkets and pubs. Either way the company is better placed than most in the sector to deal with changing market conditions and should continue to build market share,” Streeter finished.

“Mitchells & Butlers, whose brands include the likes of Harvester and All Bar One, is another name that’s impressed of late with market-beating sales growth.”

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.