Today, Stanko discuss 3 short selling candidates among the 10 most valuable brands in the United Kingdom. All of those companies operate in industries that are in secular decline.
The UK remains one of the most popular places to buy brands, Europe's centre of the marketing and advertising industry, and also the most attractive place for brand creation. Until Brexit actually takes place. In 6 months from now, the profits among millions of British companies can go down drastically. The British government now advice businesses to prepare for Brexit, in a short PDF. The problem is that nothing is clear about the upcoming exit from EU. Let's discuss the future for some of the 10 most valuable British brands and the future for individual short sellers looking to profit with modern CFDs from the comfort of their home or mobile phone. Yes, everyone can go short now or long for that matter, since modern brokers have simplified how to buy and sell equity with help of CFD's. See some examples of who are shorting here.
A balanced mix
The most invaluable British brands are a balanced mixture of oil and gas companies, banks and telecommunications. One British brand that stands out among this medley is Tesco, which is the only retail company to make it to the list. In Great Britain, Tesco currently holds the largest share in the grocery market and is considered to be the UK’s largest supermarket. According to the survey, the most valuable brands have shown more resilience and less volatility in the current COVID-19 crisis than in the global economic crisis 2008-2009. However, an increasing amount of famous people predict it's time to go short rather soon. Some of the brands with the biggest declines in value include Sky, BT and Barclays.
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UK's 10 most valuable brands
With a brand value of almost $27 billion, Vodafone is the UK’s most valuable company. HSBC, Shell, BP and BT also making the top five, the updated figures saw just one new entrant in the top 10. It is important to mention that despite the economic, social and personal impact of COVID-19, some of these companies saw their total brand value increase. Despite this, there are still overvalued stocks despite the sharp contraction in the market. Two-thirds of fund managers say that the stock market could make a correction and there are still lots of opportunities for shorting.
Vodafone: Long or short?
Vodafone maintained its position as the UK's most valuable brand and it is important to mention that Vodafone has approximately 650 million mobile customers. Beside mobile services the company also offers fixed-line services and convergence services. The fundamentals of the company are not bad but with 41 billion USD market capitalization this company/stock is expensive in my opinion. Despite this, Vodafone stock is up more than 30% since March 2020 and this stock that can be an opportunity for shorting.
On this chart (the period from August 2019), I marked major support levels that can help traders to understand where the price could move. The current support level is 15 USD and if the price breaks this level it would be a “SELL” signal and we have the open way to 14 USD. If the price breaks 13 USD which represents very strong support, the next target could be located around 10 USD.
Tesco
Tesco retained its seventh-place spot on the UK’s most valuable brands and Tesco’s brand is valued at $9.2 billion. In Great Britain, Tesco currently holds the largest share in the grocery market and is considered to be the UK’s largest supermarket. It is also important to mention that Tesco sold its Asian businesses in December to Charoen Pokphand Group for an enterprise value of $10.6B. One of the long-term challenges which has dogged Tesco throughout is the rise of foreign discounters, specifically Lidl and Aldi.
The company has recently claimed progress in its battle with Aldi, but I don’t think it will make meaningful, sustained progress in fighting back the progress of Lidl and Aldi. In the long-term, Tesco cannot win the price war and it will continue to lose market share according to analysts.
On this chart (the period from August 2019), I marked major support levels that can help traders to understand where the price could move. The current support level is 8 USD and if the price breaks this level it would be a “SELL” signal and we have the open way to 7.5 USD. If the price breaks 7 USD which represents very strong support, the next target could be located around 5 USD.
HSBC
HSBC Holdings plc (HSBC) is the banking and financial services company and it is important to mention that HSBC ‘s shares fell through support on fears of the coronavirus Covid-19 pandemic environment despite the fact that HSBC has a very generous yield and solid growth prospects. The company's revenue has increased in 2019 to 53 billion USD from 52 billion in 2018 but the growth projects will ensure that the numbers will be moving up in the future. It is also important to mention that the net income in 2019 was 7.3 billion USD while the net income in 2018 was 13 billion USD.
When we take a look at the one-year chart above , we can see that the price dropped from 40 USD to 22.6 USD and started to raise. On this chart (the period from August 2019), I marked major support levels that can help traders to understand where the price could move. The current support level is 22 USD and if the price breaks this level it would be a “SELL” signal and we have the open way to 20 USD. If the price breaks 20 USD which represents very strong support, the next target could be located around 18 USD.
