Why I’d ignore the Cineworld share price rally and buy these UK shares for my ISA

The Cineworld share price is trading at new eight-month highs. I’d still rather buy other UK shares for my Stocks and Shares ISA today.

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UK share markets continue to build on their recent strength today. The FTSE 100’s dealing at one-month highs while the FTSE 250 has just hit fresh one-year highs. However, their ascents are quite tepid compared to the rise of Cineworld Group’s (LSE: CINE) share price today.

Cineworld’s jumped 4% after comments from Prime Minister Boris Johnson on Monday on the reopening of the leisure sector. He suggested that a programme of rapid Covid-19 testing could prompt the reopening of attractions “such as nightclubs or theatres, those parts of the economy we couldn’t get open last year.”

These comments follow US President Joe Biden’s recently-announced plans to ramp up coronavirus testing in the States. This has boosted similar hopes that Cineworld’s Regal chain of cinemas could reopen before too long. Cineworld generates 73% of revenues from its US sites.

A high-risk UK share

Hopes that UK leisure shares like Cineworld could fling their doors open to the public soon are high. But a programme of mass testing wouldn’t be straightforward to implement. It’s possible that this particular cinema chain — which only has enough cash to last until May under current lockdown conditions — could have to keep its doors shut for the foreseeable future.

Glass-half-full investors might still be tempted to nip in and grab a possible recovery play. Cineworld’s expected to report heavy losses in 2021, though successful Covid-19 vaccine rollouts and the introduction of rapid testing could see it beat these estimates. The bulls might also want to buy the cinema chain because of its huge footprint in the world’s biggest movie market. It’s feasible that Cineworld’s estate in the US could deliver big profits in the years ahead.

Image of person checking their shares portfolio on mobile phone and computer

I’m not tempted to invest in this soaring UK share, though. It still faces considerable near-term risk in my opinion as pandemic lockdowns roll on and its balance sheet remains racked with debt. The rise of streaming giants Amazon, Disney and Netflix — and a changing approach to movie releases that undermines the likes of Cineworld — should provide considerable long-term challenges too.

Better ISA buys?

I’m not saying that investors should ignore all leisure stocks today, however. There are still plenty of top UK shares in this arena I’d buy for my Stocks and Shares ISA today, however.

I’d happily invest in Hollywood Bowl, for example. Consumer trends can be fickle and the resurgence of ten-pin bowling in Britain could evaporate at the drop of a hat. But trading at the company between lockdowns in 2020 suggests that bowling is still a red-hot growth segment for the time being. Besides, Hollywood Bowl is investing heavily in its estate to keep pulling the punters in.

I’d also happily buy shares in Wizz Air today. The low-cost flyer faces considerable profits problems due to mass plane groundings and a rocketing oil price. However, this UK airline share has a strong balance sheet to help it through this turbulence. And it has considerable emerging market exposure to help it deliver long-term earnings growth.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon, Netflix, and Walt Disney. The Motley Fool UK has recommended Hollywood Bowl and Wizz Air Holdings and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. 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.

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