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Investment Times

The $5.8 billion a day investment opportunity

| 30 January 2015 | A A A
The $5.8 billion a day investment opportunity

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Whilst the producers of oil may be hurting, their customers are starting to feel the benefit of cheaper fuel. The world, outside of the Middle East, consumes around 83m barrels of oil per day, and a near $70 fall in the price of oil has the effect of leaving around $5.8 billion in oil consumers' pockets, each and every day. Over the course of a year, assuming oil prices remain at current levels, around $2.1 trillion will be knocked off the cost base of oil consumers around the world.

Retailers up and down the country stand to reap the rewards of higher disposable incomes and cheaper transport costs. We believe Next, with its compelling online proposition, looks particularly well placed to benefit. Its online Directory business is the biggest contributor to group profits and grew sales by 12.9% in the financial year to 24 December 2014. Meanwhile, overseas online sales have been growing by more than 50% per annum over recent years.

View Next share prices, charts and research

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

If the UK consumer is going to have more money to spend, some of it will be spent in the pub. Stocks like Greene King could be worth a look. They are in the process of absorbing Spirit, a deal which will increase its exposure to the vibrant London economy. The company trades on a price-to-earnings ratio (P/E) of just 11.7x, well below the current market average of around 15x, and currently offers a prospective yield of 3.9% (variable and not guaranteed).

View Greene King share prices, charts and research

There aren't many more discretionary purchases than a trip to a tourist attraction, so Merlin Entertainments looks well-placed to benefit from consumers with a bit more spare cash. It is second only to Disney as an operator of visitor attractions. Merlin's best known attractions include Madame Tussauds and Legoland; both of which are being rolled out overseas.

View Merlin Entertainments share prices, charts and research

CompanyP/EYieldPerformance
over 1 year
Next16.13.7%13.9%
Greene King11.73.9%-15.2%
Merlin21.11.7%7.9%

Source: Bloomberg, correct as at 13/01/2015

Past performance is not a guide to future returns. Yields are variable and not guaranteed.

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