UK share prices exploded in the years following the 2008/09 banking crisis. And thousands of British stock investors made a fortune in the process. The FTSE 100 more than doubled in value in less than a decade following that stock market crash. I see no reason why demand for UK shares won’t soar again as the global economy recovers this time around.
History shows us that stock markets always rebound strongly in the aftermath of economic, political and social crises. It’s possible that the new bull market could have already begun too, should recent news on a Covid-19 vaccine prove to be the ‘magic bullet’ we’ve all been hoping for.
InterContinental Hotels Group (LSE: IHG) is one cheap UK share I think could fly in 2021 as the economic recovery takes hold. I’d happily buy it in my Stocks and Shares ISA today and hold it for years.
A FTSE 100 share on my watchlist
The FTSE 100 hotelier has suffered a nightmarish 2020 as Covid-19 lockdowns and travel restrictions emptied its rooms. But the UK share’s in great shape to bounce back as the world opens up again for holidaymakers and business travellers.
I’m particularly encouraged by its growing emerging markets exposure and what this will mean for profits in 2021 and beyond. InterContinental Hotels sources just below 10% of operating profits from China right now. But it has big plans to expand in the region and around a third of all beds in its pipeline are planned for Greater China. The number of net new rooms it had on its books in China soared 9.9% in the first half, to 138,674.
Could this UK share double in value?
China has emerged from the Covid-19 crisis much better than most countries. The OECD reckons that its GDP will rise 1.2% year-on-year in 2020, while it slips in all other major economies. And the organisation thinks its economy will boom over the next couple of years too, providing a fillip to InterContinental Hotels’ expansion plans.
The OECD forecasts GDP growth of 8% 2021, the best rate of expansion anywhere on the planet. And a 4.9% rise is predicted for 2022, beaten only by Indonesia. InterContinental Hotels’ pipeline will put it in a great position to ride this excellent growth. And this UK share can expect demand for its hotel rooms to keep growing through the 2020s and beyond amid solid Chinese population growth and rocketing wealth levels.
In the meantime City analysts reckon the group’s 2021 profits will rocket 607% from this year’s levels. And this leaves it trading on a forward price-to-earnings growth (PEG) ratio of just 0.1. This is dirt-cheap by any measure. And particularly when you consider the company’s exciting growth plans in Asia and its core region of The Americas. I reckon this share could double in value during the new bull market.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended InterContinental Hotels 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.