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3 Profitable British Stocks Riding High on a Soaring Pound

James Dennin, Kapitall: Hedge funds are bullish on the pound, so we found 3 profitable British stocks based on accounts receivable. 

It's been a pretty good year for Great Britain, as signs of recovery have percolated throughout the country and manufacturing has begun to rebound. Unemployment is down, and many experts have already doubled their outlook for UK GDP growth in 2014 compared to where it was over the summer. 

Source: Hedgeye

As our partners at Hedgeye explain, a lot of this is the result of strong currency and strong economic consumption trends that are developing in the UK. Bulls on Britain attribute this partly to the appointment of Mark Carney last June to head the Bank of England.

Read more on Europe from Kapitall: 7 Undervalued European Stocks to Diversify Your Portfolio

As growth is slowly restored, sentiment throughout the British economy is improving noticeably. In a very telling statistic, four in five of the companies on the FTSE 350, an index of the biggest publicly traded companies in the UK, believe that growth will be strong in the coming months. More than half of those companies plan to increase capital expenditures over the same period as well. 

There are many things underlying the bullishness about the UK, including Prime Minister David Cameron's aggressively procured lucrative trade partnerships with China.

Investing ideas

We ran a screen on British-based stocks that trade on US exchanges, looking for ways to capitalize off of this growing positive sentiment. To do that we looked for encouraging trends in accounts receivable. 

Accounts receivable is basically money that is yours, but you don't have yet – outstanding payments, outstanding loans, "checks in the mail," etc. Since there is no guarantee that you'll receive this money, it's a good thing if this number decreases as a percentage of net assets, because it shows that the company is building value and managing its finances effectively.

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