Following Boris Johnson laying out his roadmap for the full exit from lockdowns this week, value shares have done well. So, looking forward to a more normal time, these are some of the best stocks to buy now, in my view.
Possible best stocks to buy now
These four shares could all be among the strongest gainers in the Covid recovery phase.
First off, there’s Aviva. The insurer and asset manager has slimmed down, most recently selling its French business for €3.2bn. That follows on from other overseas disposals, all of which are making the group leaner. I see strong potential for the turnaround at the insurer to continue, which could bring rewards for shareholders.
But, like other large financial organisations, there’s a risk that this strategy and restructure don’t deliver the intended results. A greater reliance on the UK, Ireland and Canada also gives it less geographic diversification.
Rank Group, the operator of bingo halls and casinos, could be a beneficiary of the vaccine rollout too. Its bingo market is significant and customers are likely to want to go back to playing in person. There may also be a boost to the shares if Rank rejoins the FTSE 250, which means trackers would have to buy the shares.
WHSmith should benefit from the rush of people booking holidays. Pre-pandemic it was pushing, at the time successfully, more and more into travel locations. The travel slowdown has had a disproportionate impact on it over the last 12 months. I think many will see the firm as a way to benefit from the economy reopening and it could rise from its current share price.
When it comes to both Rank and WHSmith, I have concerns though, especially around debt. I’d keep a close eye on climbing debt loads, especially as a percentage of EBITDA or as a percentage of equity.
Getting back to events
Lastly, I like Informa. Having conferences restart in person may provide a boost to Informa. A return to physical attendance of conferences and exhibitions is already happening in China and Asia. The subscriptions part of the business should continue to grow as well. That part of the business can grow regardless of the pandemic, so is more resilient and diversifies Informa’s earnings.
At the end of 2020, subscriptions was an area the chief executive commented on as being one of strong growth. Subscriptions created £300m of adjusted operating profit for the group in 2020.
But there’s a big risk for this firm and the wider events sector. Many businesses now are used to not having to attend expensive conferences and have re-allocated budget to other activity. They’ve also found digital solutions. It could take a while though to know if this has an impact on Informa’s revenue and profits.
Clearly, all these shares remain risky. But I see big potential for them with it looking likely that the virus will be suppressed enough for life to normalise. I think they could be among the best stocks to buy right now.
