Stocks to watch as Labour Party eyes victory in 2024 UK elections

All eyes are on the UK stocks as Brits head to the ballot box on Thursday.

Many expect the Labour Party to return to power this year for the first time since 2010. That’s particularly significant for investors since the market did well the last time the United Kingdom transitioned from a Conservative government to a Labour government in 1997.

The FTSE 100 is up more than 7.0% since the start of 2024 and the “forward 1, 3, and 6-month periods could be notably strong should a similar pattern to the 1997 election emerge in the future,” as per Mark Fielding – an RBC analyst.

Two sectors, in particular, could benefit if the Labour Party does indeed come out victorious in the 2024 UK general elections. Let’s take a look at both individually.

Homebuilders

Citi analyst Ami Galla expects a Labour government to be a net positive for the housing market.

NPPF reforms the Labour Party has promised will materially benefit short-term land banks of the UK based construction companies, she added.

Galla sees Taylor Wimpey plc (LON: TW) and Persimmon plc (LON: PSN) as best positioned to capitalise on the said reforms. She expects Barrat Developments PLC (LON: BDEV) to benefit as well especially since it has a fortress of a balance sheet.

She recommends owning Taylor Wimpey and Barrat, in particular, also because they are currently trading at attractive valuations. TW shares are up some 3.0% versus the start of 2024 while BDEV is actually down close to 15% at writing.

Clean Energy

Another sector that will likely benefit from a Labour victory in the 2024 UK elections is clean energy.

That’s primarily because the Labour Party has historically been supportive of strong climate action and transition to renewable energy. The centre-left party has previously discussed plans of a green industrial strategy which may include support for emerging technologies like clean hydrogen.

A Labour government in the United Kingdom will likely be more inclined to spending on infrastructure projects that will directly benefit the clean energy stocks.

Names that are particularly well positioned to capitalise on Labour’s commitment to clean energy include ITM Power plc (LON: ITM) and AFC Energy plc (LON: AFC), as per Mark Fielding of RBC Capital Markets. Both of those stocks are currently in the red for the year.