Cineworld (LSE:CINE) has had a 2020 to forget and will be hoping for a better 2021. The Covid-19 pandemic has effectively shut down its operations and things have looked bleak for many months now. Surprisingly to many, the Cineworld share price has rallied in the past six weeks or so, which makes it look like a potential opportunity.
Cineworld share price woes
Cineworld has taken on a large amount of debt to navigate the pandemic. I believe this enormous debt level could have an effect on profits for years to come, which is not good news for investors. Any profits will probably repay creditors rather than reward shareholders.
News of the Covid-19 vaccine and its roll out in the UK have caused the share price to rally with improving investor sentiment. Since the beginning of November, CINE’s price soared over 120%. However, in the whole of 2020, it is down over 70%.
I am not willing to gamble my hard earned cash on the Cineworld share price. Instead I am looking at other alternatives.
Top UK growth stock for 2021
I believe Clipper Logistics (LSE:CLG) is one of the top UK growth stocks right now and that it will only get better in 2021. CLG offers services such as warehousing, delivery, e-commerce fulfilment, and returns management for retailers. It has a distinguished client base. This includes the likes of ASOS, John Lewis, M&S, and Sports Direct.
The CLG share price has a lot of momentum right now, unlike the Cineworld share price. CLG’s share price is up nearly 100% in 2020 alone. It has also surpassed pre-crash levels. Clipper has benefitted from government restrictions during the pandemic as consumers turn to online shopping and this is reflected in recent results.
Earlier this month, CLG released interim half-year results for the six months ending 31 October 2020. Revenue rose almost 20% compared to the same period last year. There was particularly strong performance in e-fulfilment and returns management. These divisions were up nearly 40% in revenue alone. Profit before tax and amortisation was up nearly 35% compared to the same period. The business has prospered during the economic downturn in my opinion.
In late August, CLG announced full-year results for the year ending 30 April 2020. Revenue increased by almost 9% to £500.7m while basic earnings per share rose by over 20% to 15.9p. Due to these favourable results, a dividend of 9.7p per share was declared. These results were also very favourable and only a small portion of the time period was within the pandemic. This shows CLG was already on the up prior the downturn.
Forget the CINE share price
I believe the Cineworld share price has rallied due to the belief that life may return to normal eventually due to the vaccine news. A company like Clipper Logistics has performed well throughout the downturn. I believe that the services it provides and customer base it possesses could lead to further big contract wins and catapult it towards a new level of growth. Analysts also expect CLG’s revenue to grow approximately 20% alone for this full fiscal year, which is very promising.
I mentioned earlier the Cineworld share price is too much of a gamble. Clipper Logistics is a good opportunity for 2021 in my opinion. I am also looking at other stocks that I believe could be top performers in 2021.
Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Clipper Logistics. 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.