Prime Minister Boris Johnson has now unveiled his step-by-step plan to end England’s lockdown restrictions. Some UK shares that were hit by the coronavirus pandemic have already started to rise.
Here are five UK shares that I’d buy in my portfolio, as I think they could rise further from the lifting of lockdown restrictions.
Airliners
easyJet shares have been volatile throughout the pandemic but I reckon now could be a buying opportunity. The company has a strong brand and focuses on short-haul flights rather than long-haul journeys. I think many will want a quick getaway this summer and short haul flights will be in demand.
Any negative news about the restrictions will impact the share price. For now, easyJet can weather the storm, but any delays in lifting lockdown could mean it may need further liquidity.
Industrials
I have written about Rolls-Royce shares a few times now. I reckon this UK share could benefit from the lockdown lifting.
The company derives over 50% of its revenue from manufacturing and servicing engines for the airline industry. To me, it makes sense that as the airlines start to see an increase in travel demand, Rolls-Royce shares should increase too.
Approximately 20% of Rolls-Royce’s revenue is derived from defence contracts with the UK and US governments. It has a strong order book and 2021 forecast sales are well covered. I like the revenue stability and visibility this division offers.
If air travel doesn’t pick up as Rolls-Royce expects it will in the second half of 2021, the business and shares are likely to suffer. The company will likely have to raise further capital, which may not be viewed favourably by investors.
Retail
Next shares have weathered the coronavirus storm well. I think this is due to its online sales, which account for over 50% of earnings. But it still has a portfolio of retail stores that have been temporarily closed.
I reckon the shares could rise further with the prospect of revenue generation from its stores. In my opinion, Next has a strong brand and offers consumers a diverse range of products.
Any delays in lifting restrictions will mean Next’s stores will have to stay closed further. This means it will continue paying rent on closed shops, which aren’t generating any revenue. It may even have to delay paying down its debt.
Travel
TUI shares were one of the victims of the pandemic but I reckon now is a great buying opportunity. The company is in a good operational position to meet the pent-up travel demand. I like that TUI is a leading tourism group with a strong brand.
The risks with TUI shares are its debt pile. If the lockdown restrictions persist, the company may require further financial support. I reckon this will place further emphasis on whether it can pay its debt down and impact the stock negatively.
Beverages
I like Diageo for its diversified portfolio of beverage brands. I think it offers the company some permanence and durability.
The pandemic has hit the business. But as pubs, bars and restaurants start to open up, consumers will be able to socialise and drink again. Diageo shares should rise on the back of this.
The risks are that if restrictions persist then less people will be drinking beverages. This could impact Diageo’s revenue, profitability, and dividend prospects.
