The Covid-19 pandemic has battered the Cineworld (LSE:CINE) chain. In turn, the Cineworld share price has fallen sharply over the past year or so. With no end to restrictions in sight, I am not willing to gamble any money on CINE. Instead, I really like international packaging firm DS Smith (LSE:SMDS), which is on my best stocks to buy now list.
Cineworld share price woes
Rewind to this time last year, and I could pick up shares in Cineworld for 179p per share. As I write, shares are trading for 73p, which is nearly a 60% decrease. New Covid-19 variants and vaccine rollouts have dominated the headlines in 2021 so far. Despite this gloomy start, the Cineworld share price has enjoyed a better start to 2021. To date, it is up nearly 20% since trading kicked off.
Here’s why I don’t see Cineworld as a viable investment for my portfolio right now. The new Covid-19 strains are concerning and may mean more lockdowns in the future. Next, the Cineworld share price has been battered by to the fact it has had to raise so much money just to keep the lights on. Finally, I feel cinemas have a battle on their hands to regain customers from the streaming giants. Netflix, Amazon, and Disney have all seen hikes in subscription numbers.
On the other hand, cinemas could reopen sooner than I expect. And when it does happen, people could flock to the big screen again, eager for an opportunity to get out of the house and enjoy the latest blockbuster with friends.
DS Smith
In contrast, I believe DS Smith is a good stock pick right now. Increasing online shopping numbers means there is a huge need for e-commerce, packaging, warehousing, and distribution. Some of my best stocks to buy now are from this category, such as Clipper Logistics and Tritax Big Box REIT.
Unlike the Cineworld share price, the DS Smith share price has flourished in recent months. Since the height of the market crash back in March, SMDS is up nearly 40%. SMDS has an industry-leading record of innovation. Many of its packaging products are used across a variety of retail sectors, which helps diversify its offering.
In its December half-year report, DS Smith reported it will resume its dividend. In addition, it reported an increase of 16% in cash flow compared to the same period last year. This gives it a robust balance sheet and lots of liquidity. Volume in packaging increased over 3% too.
Of course, there is a risk that earnings could come under pressure, especially if a slow economic recovery impacts broader consumer spending levels.
Best stocks to buy now or Cineworld gamble?
If I were more of a contrarian, I might consider Cineworld. It does have the potential to recover. But the uncertainty in terms of how long it could take unsettles me. As of right now, I’m avoiding the Cineworld share price and instead continuing to investigate picks from my best stocks to buy now list. Here is another from my list I really like.
