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The results of the Brexit vote in the UK shocked the investing world, resulting in panic selling extending over three trading days with paper losses totaling more than $3 trillion dollars.
Bold investors sense opportunity in market crashes and have already reaped the rewards of solid stocks seeing their share prices return to pre-Brexit levels.  Others still suffer from the hangover following the mad stampede to dump stocks, especially those with exposure to the UK and the EU.
The worst appears to be over for the moment but investors should be well aware there will be more sell-offs in the future.  Remember Grexit? Concerns over the impact of a Greek exit from the Eurozone whipsawed global share markets for around four years.  Every bit of negative news hyping the fears that a Grexit would ultimately lead to the dissolution of the Eurozone and the European Union sent stock prices plummeting. 
Brexit gives us the same uncertainties, one of which is renewed concern that a Grexit will follow and then who knows what is next. Other countries in the European Union might also call for referendums on leaving or staying. An already volatile share market climate has a whole new set of concerns to add to the “wall of worry.”  In truth, no one can predict what will happen but it is that very uncertainty that could lead to continued roller-coaster movements on share markets around the world.
The opportunity for Brexit Bargains is far from over.  Common sense tells us to wait for opportunities in stocks with exaggerated exposure to the UK and the EU.  As stock prices were falling analysts and market prognosticators were out with lists of ASX stocks most likely to suffer from Brexit.  
One such list from an analyst at Credit Suisse broadened the risk profile to include indirect exposure to Brexit fallout such as declining bond yields, falling stock prices, lower loan growth and higher bad debts, and declining international travel.
The Credit Suisse list included 25 of the most well-known companies on the ASX and included the following note to its clients:
“While many UK-exposed companies have already endured a considerable sell-off, for now we think most of these companies are only for the brave.”
As always, even the best of analysts can be wrong and there seems to be some stocks in the Credit Suisse list that bear watching.  We went through the 25 stocks on the list looking for two criteria – double digit two year earnings forecast and double digit total shareholder return over three and five years.  The earnings forecasts tell us these stocks were in good position prior to the Brexit panic.  No one knows how those forecasts will be impacted by further negative news out of the UK and the EU, but the shareholder returns over five years indicate these stocks have fared well despite the myriad bricks in the wall of worry over the last five years, including Grexit and a possible disintegration of the EU. Here is the table.  
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After the initial blood bath the stock prices began to recover slowly over the next two trading days.  A quick scan of our table and you can see the first three stocks had eclipsed their share price from the closing day before the Brexit vote by 30 June. 
Software and services company Iress Limited (IRE) is the only stock with a double digit decline, but the company operates in the financial sector, which took the brunt of the decline in the ASX.  The hardest hit companies included funds and asset management firms BTT Investments (BTT) and Henderson Group (HGG).  Henderson is based in London and BTT has UK exposure through a subsidiary.  The Credit Suisse report tells us Iress has 27% exposure to the UK and BTT and Henderson are at risk of 5% declines in stocks globally and 15% in the UK. 
Iress may be in the financial software business but its clients are primarily in equites trading and wealth and financial management. Note that the five year total shareholder return for IRE is only 9.2%, but we included it in the table since its 10 year return is 11.5%. 
There are many concerns about the impact of Brexit on the UK but chief among them is the status of London as the financial center of Europe, and the world.  The risk here is the Brexit fallout will include drastic changes in the ability of UK based financial firms to do business in the EU.  Speculation abounds that Dublin could drain some of London’s financial operations as Ireland remains in the EU.  Frankfurt also stands to benefit and is a leading contender to be a new home for the European Banking Authority (the bank regulators for the EU) as it is likely to abandon London.
The non-financial stocks in the table pose substantially less risk and the Credit Suisse characterization of these stocks as suitable “only for the crazy” seems extreme.  
Consider the price performance of the two healthcare stocks in the table – hospital operator Ramsey Healthcare (RHC) and medical diagnostics company Sonic Healthcare (SHL). The following chart tracks the price of both since they began trading on the ASX.
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The historical performance of these two companies is stellar to say the least, but what about the Brexit impact on future growth?  The Credit Suisse note indicates Ramsay generates about 10% of its earnings before interest, taxes, depreciation, and amortisation (EBITDA) from the UK while Sonic derives about 6% of its EBITDA from the UK. 
However, both have operations in the EU and as such could be subject to stock market gyrations stemming from perhaps the biggest concern of all regarding Brexit – can the EU survive?  For its Half Year 2016 results Sonic reported 22% of total laboratory revenues came from the US; 25% from Australia; and 36% from Europe.  In Europe the company operates in Belgium, Switzerland, and Germany.
Ramsay’s Half Year Results showed revenues from Australia at about $2.2 billion; with $1.6 billion from France; and $432 million from the UK.  
The concern for both is more what happens in the EU than what happens in the UK.  Yet one has to wonder whether Brexit will lead to people needing less healthcare; shortened life spans; and the unexpected and early demise of the baby boomers in the UK and the EU.  Long term trends favor these two companies. 
The future situation for supply-chain logistics provider Brambles Limited (BXB) is similar to the healthcare stocks – the company generates more of its revenue from Europe (around 30%) than from the UK (around 8%). The company operates in every continent on the planet, supplying pallets, reusable plastic crates, and containers.  The principal revenue generators are the pallet business (CHEP) and the RPC’s (reusable plastic crates.)  Both are “pooled” meaning they are reusable and shared by client companies, returning them to Brambles service centers for maintenance and re-distribution to other clients.   
Brambles is massively diversified, serving customers in multiple industries around the world.  Although the company has performed well in a weakened global economy, the risk here is two-fold.  First, free trade agreements make it easier for companies to do business across borders.  Should the EU splinter, that could seriously impact Brambles’ business.  The second risk is a full-blown global recession.  Over the last five challenging years the company’s share price is up close to 100%, besting the ASX 200 by a wide margin.
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Macquarie Atlas Roads Group (MQA) bills itself as a global infrastructure developer and operator.  Toll roads are the company’s specialty, with four operational roads in the US, France, Germany, and the UK.  The company swung from a $50 million dollar loss in FY 2014 to a net profit of $85 million in FY 2015.  
MQA was spun off from Macquarie Infrastructure Group in 2010 and is up about 200% since that time.  Here is the chart.  
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The share price is up 57% year over year.  The company derives about 70% of its revenue from its toll road in France. According to Credit Suisse the possibility of re-introducing border controls in Europe pose a risk.
Sydney Airport (SYD) had a very good year in FY 2015, reporting a net profit $283 million, up from $59.1 million in FY 2014. In addition to owning and operating the Sydney Airport, SYD also offers retail outlets throughout the airport, as well as property leasing and advertising services.  The share price is up about 150% over five years and 30% year over year.  SYD has a current dividend yield of 4%, unfranked, with a two year dividend growth forecast of 12.9%.  Of the international passengers passing through the airport, 4% are from the UK with 3% from Europe.
Treasury Wine Estates (TWE) took a $240 million dollar write-down in 2014, resulting in a profit loss of $100 million for the year.  The company came back, and reported a net profit of $78 million for FY 2015.  TWE was spun off from Fosters Limited in 2011 and has seen multiple asset write downs since. 
Despite its troubles the share price has risen from its opening day closing price of $2.84 to the current $9.70, an increase of 242%.  The company sells the wine it produces in 70 countries, grouped into four regions – Australia/New Zealand (ANZ); the Americas; Europe/Middle East/Africa (EMEA); and Asia.  For FY 2015 48% of revenue came from the Americas, with 32% from ANZ; and 14% from EMEA.  According to Credit Suisse, TWE gets about 10% of its revenue from the UK.  The real risk to Treasury Wine Estates is currency fluctuation, again according to the Credit Suisse note to investors, assuming the Brits don’t stop drinking wine!
Treasury Wine reported earnings per share (EPS) for FY 2015 of $0.127.  Analysts expect that to more than double, coming in at $0.275; and then rising again to $0.358 in FY 2017.
Considering the massive scale of the post Brexit declines, the declines of six of the seven stocks in the table seem relatively small.  After the 14% drop in IRE, Treasury Wine was next in line with a drop of 6%.  Considering the possibility the risk in these stocks is lower, short-term gains from 2 % to 6% seem quite reasonable, especially when one considers the long-term prospects for these companies.
Membership in the European Union involves a maze of agreements which will take time to unravel. Expect a continuous flow of news as the process progresses, with any hints of cracks in the EU impacting global share markets, and not in a positive direction.  If you missed out on Brexit opportunities the first time, it is a near certainty you will get another chance. 

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The information in this article should not be considered personal advice. The article has been prepared without taking into account your objectives, financial situation or particular needs. Before acting on the information in this article you should consider the appropriateness of the information, with regard to your objectives, financial situation and needs. Do further research of your own or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article.