The upcoming Commonwealth Games have the opportunity to focus investor minds on the U.K.’s “Mittelstand” in the Greater Birmingham region, an analyst says.
Mittelstand is the German word for small- to medium-sized enterprises. The Commonwealth Games, a mini Olympics for former members of the British Empire, are due to be held in Birmingham starting July 28.
“The heart of the Midlands was the birthplace of the industrial revolution which began in the 18th century. Birmingham is a major city in the West Midlands and is still home to the UK automotive industry and a profusion of SMEs,” said strategists at Jefferies led by Sean Darby.
U.K. SME stocks appear to have a decent return on equity and value, they said. They screened for industrials offering both value and quality, coming up with a list including Mitie Group
MTO,
-1.99%,
Pagegroup
PAGE,
-1.30%,
SThree
STEM,
+0.11%,
Avon Protection
AVON,
+0.96%
and Morgan Advanced Materials
MGAM,
+1.09%.
“We continue to like the UK banks whose dividend yield is half the multiple of the PE – a value investor’s dream whilst trading on fair PEG ratios,” they added. That description, on Jefferies numbers, can be applied to Bank of Georgia
BGEO,
-2.31%,
Barclays
BARC,
+0.97%,
Lloyds Banking Group
LLOY,
+2.22%,
OSB Group
OSB,
-0.45%,
TBC Bank
TBCG,
-1.21%
and Virgin Money UK
VMUK,
-1.03%.
The FTSE 100
UKX,
+0.16%
edged up 0.1% in afternoon trade, with investors hesitant ahead of the Fed minutes, due after the London Stock Exchange close. Supermarket delivery firm Ocado
OCDO,
+3.82%
rose 4% to lead the U.K. benchmark, while movie-chain operator Cineworld
CINE,
+21.88%
surged 20% to be the top performing FTSE 250 stock.
