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Reopening stocks: 2 UK shares I’d buy with £2,000

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I am looking to reopening stocks to boost my portfolio. These are stocks that are positioned to benefit once the economy reopens after the pandemic. Here are two UK shares I’m interested in right now.

Reopening stock #1

Stagecoach (LSE:SGC) is one of a number of UK shares that could benefit from the reopening of the economy. Due to the pandemic, sales have fallen to 46% of 2019 levels.

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As I write, Stagecoach is priced just below 90p per share. Pre-crash prices were over 140p per share. In addition, past performance indicates revenue has been decreasing for a couple of years. Despite this, the business has remained profitable and I expect profitability to continue and eventually grow. Past performance isn’t always an indicator of future performance, however.

I believe Stagecoach will benefit in the long term from government initiatives and increased demand. One of those initiatives is the National Bus Strategy. There are also other plans to get more vehicles off the road, which suggests to me that the public transport level and its demand could increase. Stagecoach’s recovery and viability could be affected if Covid-19 restrictions are reintroduced. In addition, if office use doesn’t return, this could also affect demand.

Based on Stagecoach’s current price, past performance and potential for the long term, it is part of my UK shares list I would buy as a reopening stock.

Stock #2

National Express (LSE:NEX) is the other UK share I’m interested in right now. Its price has experienced an upward trend for a number of months now. As I write, I could buy shares for 286p. This price is 40% higher than this time last year, but still not close to pre-crash levels, which were over 420p.

National Express has a key advantage over its competitors, which is why I class it is a prime reopening stock. Its size and geographical footprint means it often wins lucrative contracts. 80% of its revenues are derived globally. Contract revenue is stable, which I like. With each win further diversifying its offering, it is increasing market share. 

National Express has seen steady revenue growth year on year (aside from 2020 due to the pandemic). Furthermore, it has an excellent record of free cash flow generation. The first half of 2020 was not a great period for it, but the second half saw normality resume for it in terms of free cash flow generation.

I see lots of potential in National Express. Its size, footprint, market share, and previous performance make me believe it could be a prime reopening stock. The issues it could encounter in the short term are similar to those of Stagecoach. Office use being deemed surplus to requirements will affect demand. In addition, Covid-19 restrictions will affect performance too. Overall I am not worried about these two shorter-term issues and prefer to look to the long term.

UK shares at the mercy of Covid-19

Both Stagecoach and National Express could be good long-term buys for my portfolio. I admit there are some headwinds they need to navigate. These are mainly linked to Covid-19. The changing nature of variants and restrictions could mean both these UK shares may take some time to recover. As a Foolish investor, however, I prefer to look for long-term investments. As reopening stocks go, I like these two in particular right now.

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Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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