First Brexit. Now Frexit? Give Me a Break-xit!

By the time you read this, we should know the results from the first round of French elections. The vote was designed to narrow the field to two candidates, one of whom French voters will choose as their new president in a run-off on May 7.

As of this writing, I don’t know if far-right candidate Marine Le Pen and/or far-left candidate Jean-Luc Melenchon prevailed – or how the markets are reacting. Investors dislike Le Pen because she’s anti-euro, and dislike Melenchon because he’s an avowed socialist whose tax and deficit spending policies are pretty extreme.

But I do know this: All this talk of a French euro currency “Frexit” … just like the British “Brexit” talk from last summer … has me saying “Give me a Break-xit!” Here’s why …

Take a look at this stock chart of the iShares MSCI United Kingdom ETF (EWU, Rated “C-”), a benchmark ETF that tracks 116 leading U.K. companies. It’s easy to spot the big “gap” down on June 27 in the wake of the Brexit vote. Many investors figured that after the initial selloff, British stocks would keep on plunging and the economy would sink into a terrible recession.

But instead, the EWU gapped right back up the next day … and kept on going. The economy also didn’t fall apart. If you bought on the panic day and held through late last week, you’d be sitting on total returns of around 17%.

What about the iShares MCI France ETF (EWQ, Rated “C”), the ETF that owns 79 leading French stocks? It got hammered that day, too. But even with the recent election turmoil, anyone who stepped into the breach and bought EWQ was recently enjoying total returns of 22%.

Of course, all this “Fill-in-the-European-country-name-exit” talk started with Greece. It was the original fiscal basket case, and it came dangerously close to getting booted out of the euro a few years ago. But the funny thing is, if you snapped up the Global X MSCI Greece ETF (GREK, Rated “D”) of 31 Greek stocks during the Brexit meltdown, you’d have racked up returns of around 27%.

One thing is clear: Panicking didn’t work so well in the wake of Brexit. Nor did it make you much money in the wake of Donald Trump’s election. Stepping in and buying was a much better play in hindsight.

So if the market tanks due to Frexit fears now, or in a couple of weeks when the final vote is held, keep that in mind. And if the voting process works out in Wall Street’s favor? Then that’s all the better, and it could be just the thing to get the stock market back on track.

In either event, I figured it might be helpful for you to have a list of Frexit Fear stocks at the ready to capitalize on whatever unfolds. So with the help of the Weiss Stock Screening tool (which you gain access to as a Weiss Platinum member; Click here to join), that’s just what I created.

I started by zeroing in on companies based in France, the U.K., and Greece. Then I eliminated any SELL-rated names. Next, I limited the universe to stocks with market capitalizations of at least $50 million, closing prices of at least $5, and 30-day average trading volume of at least 50,000 shares.

Finally, I stipulated that the remaining stocks had to have nine-month returns of at least 17%. That was the return generated by the weakest of the three benchmark foreign ETFs I mentioned earlier in the wake of the Brexit vote, which was just over nine months ago. Here’s what the resulting “Exit Stock Screener” list looked like, sorted from best Weiss Rating to worst:

Data date: April 19, 2017

Carnival plc (CUK, Rated “B”), the British cruise line operator, received the highest Rating. It has racked up gains of around 27% since last summer. CUK was closely followed by two French companies: The luxury clothing, purse, fragrance, and liquor producer LVMH Moet Hennessy – Louis Vuitton SE (LVMUY, Rated “B”), with returns of 43%, and the insurance and financial services giant AXA SA (AXAHY, Rated “B-”), with returns of 24.8%.

The remainder of the companies who passed my screening process were a mixed assortment of firms in the energy, financial services, mining, and industrial sectors. At least one – London-based corporate network and cloud security firm Mimecast Ltd (MIME, Rated “C-”) – has really turned on the afterburners, rising more than 134%.

So the next time markets suffer any kind of “exit” shock, it may pay to take a deep breath and start digging into companies like these. They certainly recovered nicely from the Brexit mess, and could easily do so again.

Until next time,

Mike