2 UK stocks to buy before ‘Freedom Day’

G A Chester reckons his two UK-stocks-to-buy are even stronger businesses and more attractive investments today than they were pre-pandemic.

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I’m looking at UK stocks to buy in the travel & leisure sector right now. These plummeted last year with the onset of the pandemic. Many have since regained quite a lot of ground as the bumpy road out of lockdowns has progressed. But I still see value in some of them.

Here are two I’d be happy to buy ahead of ‘Freedom Day’ (19 July). I was keen on both before the pandemic struck. Let me explain why I believe they’re even more attractive now.

Leading brands

As well as having had their businesses and share prices hammered last year, National Express (LSE: NEX) and Whitbread (LSE: WTB) have a number of more positive things in common. I think these qualities make them fundamentally attractive businesses.

National Express and Whitbread’s Premier Inn hotels are well-established and highly visible brands. In the UK, the former holds the largest market share for long haul coach transport. The latter is the largest hotel chain. Their strong brands and economies of scale give them competitive advantages.

They also operate in the value-for-money segments of their respective industries. I think this gives them some resilience through tougher economic times. Well, tougher economic times of the regular variety.

Winning through the pandemic

During the extreme crisis of the pandemic, National Express and Whitbread were able to bolster their balance sheets and liquidity, thanks to supportive investors and lenders. This financial strength is enabling them to continue investing in their businesses. I see them strengthening their positions at the expense of financially-constrained competitors.

Ahead of the pandemic, both companies were reporting good momentum in their businesses. Through the pandemic, Whitbread said it’s been able to “deliver strong market share gains in the UK” when it’s been permitted to trade. It also said it’s been able to “materially accelerate the growth” of its nascent hotel network in Germany.

Meanwhile, National Express has won £900m of new contracts at home and abroad, including a first entry into Portugal. It’s also recently announced a bolt-on acquisition in Spain. This being “a further step in consolidating the regional and urban bus markets” in that country.

My UK stocks to buy in summary

Leading brands, economies of scale and attractive industry segments. Financial strength, continuing investment, and market share gains from financially-constrained competitors. Add to these qualities sustainable cost-saving programmes and exciting growth opportunities, particularly in overseas markets. Now you can perhaps understand why these are two UK stocks I’d like to buy before Freedom Day.

Of course, all investments come with some risk. In the near term, a reimposition of restrictions, or lockdowns due to a vaccine-resistant virus mutation, is one risk. In the longer term, expansion into new overseas markets doesn’t always work out as hoped. This could be potentially damaging to my investment returns.

However, due to the qualities I’ve discussed, I think National Express and Whitbread are even stronger businesses and more attractive investments today than they were before the pandemic. And, as I’m comfortable with the risks, both stocks look very buyable to me right now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK 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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