Alert: Time could be running out to buy these Brexit-proof FTSE 100 stocks

Brexit uncertainty is the most significant risk UK investors face over the next six months. With this in mind, today I’m looking at two FTSE 100 stocks that I believe will continue to thrive, no matter what deal emerges from the chaos.

Away from home

A disorderly Brexit might throw the UK economy into turmoil, but no matter how widespread the fallout, FTSE 100 member Rentokil Initial (LSE: RTO) is unlikely to see a significant drop off in business.

Specialising in pest control and hygiene products, Rentokil is, in my opinion, one of the FTSE 100’s most defensive stocks. Rodents don’t take time off — no matter how poorly the rest of the economy is faring.

What’s more, only around 10% of the company’s revenue comes from the UK. The firm also has operations in North America, Europe, Asia and the Pacific region. It’s been growing steadily in these regions by acquiring smaller businesses that offer good growth potential, using a mix of cash flow from operations and debt, buying from owner-operators, and then using its experience to reduce costs and improve sales.

So far, this strategy has been highly effective. Net profit has jumped four-fold over the past five years, and the dividend has increased by more than 100%. 

As long as the business doesn’t overstretch itself, I see no reason why this trend cannot continue. There’s still plenty of smaller operators out there to merge into the larger group, which should support revenue growth for many years to come. Indeed, the company acquired 16 new bolt-on businesses in the third quarter alone.

Granted, shares in Rentokil aren’t cheap — they’re currently changing hands for 22.5 times forward earnings — but considering the group’s future potential and international diversification, I reckon the stock deserves this premium multiple.

Focus on emerging markets

Rodents don’t take off, and neither does commodities trader Glencore (LSE: GLEN). No matter what happens to the UK after Brexit, this business, which also has operations around the world, is unlikely to see any significant impact on its performance.

Glencore is a unique business in the commodities world. It’s the world’s largest trader of commodities, such as grain and oil, but it’s also a significant producer of commodities, such as coal, copper, nickel and cobalt. The last two of these are vital components in the battery packs of electric vehicles, which will act as a hedge against falling demand for coal. 

Glencore doesn’t expect the demand for coal to tail off anytime soon, either. In a recent presentation, the company told investors an extra 1bn tonnes of coal fired-power capacity was currently under construction around the world, underpinning demand for as much as 250m in additional coal production over next five years.

With the UK committed to phasing out dirty fuels such as coal, it’s difficult to think of this as a growth business for Glencore, but that’s what management seems to believe. It also means the company is highly insulated from Brexit fallout. A dividend yield of 5.9% only sweetens the attraction, in my opinion.

Glencore might not be everyone’s cup of tea, but this global commodities trader is, in my view, one of the most Brexit-proof stocks in the FTSE 100.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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