The coronavirus vaccine is here, and so is a stock market rally. Big gainers from this are lockdown-impacted stocks. So far, however, their run-up has been hesitant. Share prices rise sharply one day, only to pull back the next. It’s quite possible that investors see price increases as a good time to exit affected UK shares.
If I wasn’t sure of their future, I’d sure cut my losses or sell off to break even or make a small profit. But with the future more predictable now, I think a steadier build up in these stocks can happen. In fact, I think there are at least three sectors and 10 stocks that can double my money if I buy today:
#1. Travel and related UK shares to benefit
Travel will benefit big time from widespread use of coronavirus tests and Covid-19 vaccines. Airlines like IAG, easyJet, and Wizz Air should be big beneficiaries from this. Suppliers to aviation, like Rolls-Royce should also benefit from demand increase.
But it’s hardly just aviation that benefits. Companies related to road transport like Stagecoach and National Express will benefit too. As an investor in National Express, I have been watching this one stock with special interest. Despite not-half-bad updates, its share price has remained stubbornly low compared to where it started the year, because of a generally gloomy environment. I reckon this will change soon. Indeed, it’s already changing. If I had bought NEX two months ago, the UK share would have doubled my money already.
#2. Hospitality to open its doors wide again
Increased travel goes hand-in-hand with improved fortunes for hospitality companies. It’s possible that some business travel has been permanently impacted by coronavirus. But it’s also true that much of it will return over time. UK shares like Whitbread, owner of business hotels Premier Inn, and InterContinental Hotels Group should benefit as a result. Much like in the case of NEX, Whitbread’s share price too has galloped fast. It has almost doubled in the last month alone.
#3. Leisure and entertainment will be back in business
Leisure and entertainment stocks are also looking at better times ahead. Cruise operator Carnival will also continue to benefit. Its stock was the biggest FTSE 100 gainer yesterday, with the UK share’s price seeing an increase of 10%. I reckon that cruises may be slower to pick up, though, than more readily available entertainment options like cinemas. On Monday, I wrote about the FTSE 250 cinema chain, Cineworld, whose share price increase has been exceptionally sharp in the past month. I think there’s room for much more.
I don’t think these companies’ financials are going to bounce back soon, though. Cinemas, for instance, are expected to open only in May 2021. Air travel demand is expected to come back to 2019 levels only in another three years. What I do expect, is improved performance from current levels. And even more than that, increased expectation of better performance. That will drive share prices up further, and quite likely double my money if I buy these UK shares today.
Manika Premsingh owns shares of easyJet and National Express Group. The Motley Fool UK has recommended InterContinental Hotels Group and Wizz Air Holdings. 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.