3 UK stocks to buy before ‘Freedom Day’

G A Chester is eyeing these UK stocks to buy. He reckons they can emerge stronger from the pandemic than financially-constrained competitors

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A colourful firework display

Image source: Getty Images.

Recovery plays in the travel & leisure sector are currently high on my list of UK stocks to buy. Many have already regained a fair bit of ground from last year’s pandemic crash. But I still see good value in a number of them.

I’ve written recently about two FTSE 350 firms I’d be happy to buy ahead of 19 August’s ‘Freedom Day’. Here are three smaller companies I believe are similarly set to come out of the pandemic even stronger than when they went in.

Pre-pandemic momentum

Cinema chain Everyman Media Group (LSE: EMAN), fitness chain The Gym Group (LSE: GYM) and pubs and hotels chain Young & Co (LSE: YNGA) all had good business momentum before the pandemic. This is clear from their pre-pandemic trading updates.

EMAN reported record sales and a big uplift in its market share of the UK box-office. GYM announced another year of strong growth in members and revenue. YNGA delivered good growth against tough prior-period comparatives and increased its dividend for the 23rd consecutive year.

All three businesses were knocked for six when the UK went into lockdown. However, I was impressed by how their managements handled this period of unprecedented turmoil (“the most challenging in our 189-year history,” in YNGA’s case). Furthermore, I believe they’re now very well-positioned to regain the strong business momentum they had before the pandemic struck.

Pandemic management

EMAN, GYM and YNGA moved quickly to strengthen their balance sheets in the first months of the pandemic. All three were backed by shareholders willing to inject fresh capital into the businesses. Lenders were also very supportive.

The financial backing enabled EMAN, GYM and YNGA to continue a limited amount of expansionary capital spend. Since the first lockdown, the companies have opened a smattering of new sites, as well as invested in targeted refurbishments and staff retainment and training.

I suspect this has put them in a stronger position for coming out of the pandemic than some of their less financially-robust competitors.

Post-pandemic plans

EMAN is “looking forward to unveiling an enhanced venue experience in the coming months.” It’s going cautious on expansion of its 35 sites this year but has a pipeline of seven new venues for 2022/23.

GYM has recently done another equity fundraising to accelerate site rollout. It believes “the Covid-impacted commercial property market provides a unique opportunity to increase the company’s pipeline of attractive sites on favourable commercial terms.”

Meanwhile, YNGA has just announced it’s selling its tenanted estate. This will provide it with “additional firepower” to upgrade its managed freehold pubs and hotels. And also “capitalise on attractive acquisition opportunities that may come to the market.”

My UK stocks to buy come with risks too

There’s an obvious risk for me investing in EMAN, GYM and YNGA right now. Namely, a new virus variant that produces a return of restrictions or lockdowns. Or, in the absence of government diktats, a reluctance of consumers to visit leisure and hospitality venues. In either of these scenarios, my investment would surely suffer — certainly in the short term.

However, I’m prepared to accept this risk. I think the momentum in these businesses before the pandemic, the continuing support of their shareholders and lenders through it, and their current levels of liquidity mean they’ll ultimately emerge stronger than more financially-constrained competitors.

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 considered so you should consider taking independent financial advice.

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

More on Investing Articles

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

2 of the best stocks to buy now with £500

I think that Berkshire Hathaway and Activision Blizzard are two of the best shares to buy today. I think they…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

I bought 10 cheap shares. Here’s what happened next

After recent price falls, we bought 10 cheap shares for extra passive income in future. This mini-portfolio offers a tasty…

Read more »

Close up view of Electric Car charging and field background
Investing Articles

Is now a good time to buy Chinese EV stocks as economic growth slows?

Chinese EV stocks tend to trade at a considerable discount to their US counterparts. And that's one reason I like…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

I’d happily start investing in today’s stock market – here’s why

The stock market has been moving up even as the economy has been looking shakier. Would our writer start investing…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Up 22% in a month! This FTSE 100 takeover target could rise further

A takeover bid for an FTSE 100 firm is big news. Here's what I'm doing about RS Group shares after…

Read more »

Young female analyst working at her desk in the office
Investing Articles

Income shares could help me turn £300 into £500. Here’s how

Our writer believes investing in the right income shares over the long term could be lucrative. Here is his approach.

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

I bought these FTSE 250 shares for fat dividends!

These two FTSE 250 shares have gained in value since I bought them recently. But I still see these stocks…

Read more »

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

Should I buy this REIT to add to the others that pay me juicy dividends?

Jabran Khan looks closer at this real estate investment trust (REIT) and decides if he would add the shares to…

Read more »