A lot of recovery in UK stocks has already happened. In fact, some recovery stocks, that are otherwise vulnerable to downturns, have even far surpassed their pre-pandemic levels. Examples of these include the FTSE 100 retailer JD Sports Fashion and multi-commodity miner Anglo American.
However, there are some that are still lagging behind. These include travel stocks like coach and rail services providers and airlines, among others. So far they have seen the most nervous recovery among all stocks. Any hint of negative news sends them tumbling down. As a shareholder in a few of them, like International Consolidated Airlines Group (IAF), easyJet, and National Express, I’ve found this to be an exercise in patience.
Risks still persist
It is also one that entails a fair bit of risk. The risk, of course, is that of coronavirus. We have come a long way since last year, but these companies’ financials have become relatively precarious in this time. easyJet’s upcoming rights issues is one example of such companies having to raise money multiple times in the past year. And we are not sure when the uncertainty will be behind us for sure. This means that their financials could even worsen.
But if I make the right calls, these may just be my best long-term investments too. Right now their share prices are quite low, but as and when things go back to normal, they will start rallying. We have already seen impressive recovery across other stocks. And this is not just in terms of share prices but also their performance.
UK recovery stocks to consider
In fact, some of it is already visible. Earlier this week, I wrote about the online coach and rail ticket provider Trainline in this context. As per its latest update, ticket sales have improved in the past months, with notable improvements in its UK consumer segment. Similarly, coach operator National Express reported decent results for this time, a couple of months ago. Go-Ahead Group, another coach and rail operator, has also turned in encouraging updates.
The summer months have been kind to airline companies as well. The likes of IAG and easyJet increased flights during this time, as speedy vaccinations made it possible for people to travel. It remains to be seen if the travel demand continues going forward in the year, but it is possible that there is some pullback partly because of seasonal variations and also because of rising coronavirus cases. All in all, though, I think it is fair to expect travel to be way better than last year even during the winter months.
What I’d do
Besides the stocks I already own, I do also like both Trainline and Go-Ahead.To hedge my risks, I would like to balance out these purchases with FTSE 100 defensive stocks, but I think that investing £1,000 in them could be a good idea for my portfolio.
Manika Premsingh owns shares of Anglo American, JD Sports Fashion, National Express Group easyJet and International Consolidated Airlines Group. 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.