Which FTSE 100 and FTSE 250 shares could benefit most from Andy Burnham becoming UK Prime Minister? It’s just been confirmed current PM Keir Starmer won’t be in Number 10 beyond September. A Burnham government could have significant ramifications for a wide range of UK shares, both good and bad.
Vistry Group (LSE:VTY) and Compass Group (LSE:CPG) are two stocks I suspect could receive a boost. Why? Their profits could grow if the bookies’ favourite for new Labour leader succeeds.
Let me explain how.
Social housing
Vistry is one of the UK’s largest housebuilders. But unlike its peers, it no longer relies on selling homes to private buyers. Instead, it focuses on a partnership model providing affordable and social housing and works with local authorities and housing associations to deliver new homes.
This could be critical, given Andy Burnham’s views on solving Britain’s housing shortage. Just this month he confidently stated
what fixes the housing crisis? I would say it’s council homes.
This could be significant for Vistry, given its expertise and robust relationships in this field. Some of the potential boosts could include:
- Greater long-term contracts for earnings stability and visibility.
- Less dependence on the more volatile private homes segment.
- Faster build rates, as construction doesn’t need to match private market conditions.
- More protection from an overhaul on Council Tax and Stamp Duty that impacts private homebuyers.
So would Burnham as PM make Vistry a ‘no brainer’ buy? Not necessarily. With social housing delivering lower margins than private sector homes, the FTSE 250 firm could underperform its rivals during market upturns. Yet it’s still a top stock to consider if Labour’s new MP for Makerfield steps into Number 10.
A FTSE 100 winner?
Andy Burnham has been less explicit on his plans for public sector spending. However, it’s expected that Britain’s potential next PM could raise taxes on wealthier individuals to put money into areas like education and health.
This could in turn be a big boost for Compass Group. Why? This FTSE 100 share is one of the world’s largest providers of catering and support services to schools and hospitals, alongside defence sites, care homes and other publicly-funded organisations.
Like Vistry and social housing, Compass is deeply embedded in the sectors it serves. It provides food and facilities management in more than 2,000 schools, universities and other educational institutions, for instance, and more than 50% of the UK’s defence estate.
Higher government spending would certainly give Compass’s dividend policy a healthy lift. How so? The company operates under long-term contracts that generate stable recurring revenues. This has, excluding pandemic-hit 2020, supported consistent annual dividend growth this century. A better-funded public sector would further reinforce those impressive cash flows.
To be clear, Burnham isn’t Prime Minister yet and hasn’t disclosed specific plans that might boost the FTSE firm’s earnings. It could also face significant competition for contracts that impact its future opportunities. That said, I still believe it could receive a big boost under potential PM Burnham.
Should you invest £5,000 in Compass Group Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Compass Group Plc made the list?
Royston Wild does not hold any positions in the companies mentioned.
