UK vaccine approval: the share I’d buy now

With businesses expecting to get back to more normal trading following UK vaccine approval, here’s a share I expect to benefit.

| 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.

Syringe and vial on blue background

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The UK has now approved the Pfizer vaccine for use. Positive vaccine-related news has tended to help the stock market. I expect that this UK vaccine approval will also lead to positive sentiment for recovery shares.

One share in particular I like is pub operator JD Wetherspoon (LSE: JDW).

Why vaccine approval is good news for Wetherspoon

The UK has had a stop-start system of lockdowns across the country this year. One of the worst-affected types of business has been pubs and there has been uncertainty around whether and how pubs can open at times. For example, in England, the requirement to serve substantial food meant forced closure for pubs without dining offered. But pubs also face a unique problem with stock disposal. While some shops can shut their doors and reopen with the same stock, pubs cannot. Beer goes stale. So each lockdown has meant many pubs have literally had to pour valuable beer down the drain rather than sell it to thirsty punters.

The selective lockdown approach to pandemic management is thus very damaging for the pub trade. A vaccine offers a different way out of the pandemic. UK vaccine approval will allow a mass vaccination effort. With that, public life ought to get back to normal – including pubs being open.

JD Wetherspoon has had a torrid year, like many pub owners, and in October reported its first loss in over 30 years. However, if the pub trade goes back to normal, it is ready to benefit. Where it has been allowed to do so, it has kept its pubs trading through lockdown. Additionally, it is still standing. I expect a lot of pubs will unfortunately go under this year and never reopen. That means a lot of trade for other pubs. At least some of that is bound to come the way of Wetherspoon.

I’d buy Wetherspoon shares now

The shares have already recovered a lot this year, more than doubling from the lows they hit in March. In November alone, they put on almost 30%. So there already seems to have been a shift in sentiment on the shares. That may have been in anticipation of the vaccine.

However, I continue to see the shares as good value and would buy them today. The company has a winning formula in the market, with its combination of cheap beer and popular locations. Its chief executive has continued to increase his stake over many years, aligning management interests with those of shareholders. While its balance sheet has more debt than I would like, it is still more attractive to me than the balance sheets of competitors such as Mitchells & Butlers.

I expect the UK vaccine approval news will be broadly good for market sentiment. Specifically, I think it will force a reevaluation of companies that stand to gain business from mass vaccination. Wetherspoon is one and I would buy it today.

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.

christopherruane 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »