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ISA investing: I think this cheap UK share will thrive in a post-Covid world

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These are trickier waters than usual for UK share investors to navigate. The possibility of a simple and sharp economic recovery is in peril as Covid-19 variants keep emerging. The coronavirus crisis has seriously damaged the long-term outlook for a large number of British stocks too.

I haven’t stopped investing in my Stocks and Shares ISA during the past 12 months, however. There are still plenty of UK shares I think will deliver big profits in 2021 and beyond. In fact some British stocks have received a boost from ongoing Covid-19 lockdowns.

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The pandemic has had a significant impact on the education sector. But lockdowns have had a positive effect on Bloomsbury Publishing (LSE: BMY). This is because demand for the company’s online academic resources has rocketed over the past year. Revenues from the UK share’s Bloomsbury Digital Resources division soared 47% in the six months to August as the closure of academic institutions forced students to get their educational fixes elsewhere.

As we’ve seen with e-commerce and the growth of homeworking, I think the coronavirus has created a sea change in the way educational information is accessed and absorbed. Even when education centres reopen, I reckon Bloomsbury’s online academic texts will remain popular. It explains why fellow publisher Pearson recently announced plans to “accelerate our digital growth” with significant employee appointments.

Private investor buying UK shares at home

There are always risks to the likes of Bloomsbury of course. Unauthorised replication and distribution of academic material is much simpler with digital resources than with traditional paper-based textbooks. Declining student numbers in the areas in which Bloomsbury specialises is another problem. University admissions service UCAS says thathumanities subjects have decreased in popularity over the last decade”, for instance.

There’s always the eternal problem that a bad book review or two could result in disappointing revenues at Bloomsbury’s Consumer division too. But so far the publishing share has had success in making itself the home of some of literature’s most popular authors and franchises. Bloomsbury is perhaps most famous for being the publisher of the evergreen Harry Potter series of cash cows.

A cheap UK share I reckon will thrive

City analysts expect Bloomsbury’s annual earnings to edge 2% higher this fiscal year (to February 2021). They reckon that the bottom line will swell 18% in financial 2022 too and 21% the following year.  It’s important to remember that earnings can exceed current estimates. But they can also fall short depending on the trading landscape.

Still, current forecasts leave Bloomsbury trading on a price-to-earnings growth (PEG) multiple of 0.8. Conventional investing wisdom states that a UK share trading on a ratio of below 1 might be undervalued. I certainly believe this to be the case with this publisher, whose mighty Consumer unit and growing Bloomsbury Digital Resources should — in my opinion — deliver solid profits growth over the next decade.

A Top Share with Enormous Growth Potential

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While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Bloomsbury Publishing and Pearson. 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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