If I had £1,000 to invest, I think the best stocks to buy now would be companies that may benefit from the economic recovery over the next 12 months.
As the global vaccine rollout gains traction, the outlook for companies most affected by the coronavirus pandemic is improving.
Unfortunately, it’s unlikely to be plain sailing for these businesses as we advance. The vaccination programme is having an impact on coronavirus infections, but there’s no guarantee the economy will bounce back quickly. It could take years for spending in sectors such as tourism to recover to 2019 levels.
The best stocks to buy now
There’s one main reason why I’ve picked these companies in particular. They’re both leaders in their respective industries.
easyJet is one of the most successful low-cost airlines globally and dominates the European air travel market. Its brand is highly recognisable and, unlike peer and main competitor Ryanair, it has a solid record in customer service.
Meanwhile, Carnival is the world’s largest cruise ship operator. This gives the company economies of scale. Its size has also helped the enterprise raise finance from investors over the past 12 months to keep the lights on.
I believe these advantages will help both companies recover quickly when the time comes. Consumers know their brands, and they could be the first organisations holidaymakers visit when booking their post-pandemic trips.
Carnival has already said its bookings for the first half of 2022 have already surpassed 2019 levels. This is an incredibly positive development, and I believe it indicates the potential here. That’s another reason why these equities feature on my list of the best stocks to buy now.
That said, despite these companies’ advantages, it has been touch-and-go for both over the past year. The next 12 months will be crucial for both Carnival and easyJet. It remains unclear at this stage if they’ll be able to survive if global travel restrictions last into 2022.
This is the most significant risk facing these two operations. While both companies may see a rapid recovery if the travel market opens later this year and next and consumers spend freely, they may struggle to survive if restrictions last longer than expected.
As it stands, both could generate lucrative returns for investors as the economy reopens. That’s why I believe they’re the best stocks to buy now. However, these are high-risk, high-reward opportunities. As such, they aren’t going to be suitable for every investor.
However, I’d limit my investment in these shares because of the level of uncertainty surrounding their outlooks. I don’t want to risk too much of my portfolio on companies that, in the case of Carnival at least, don’t have any revenue at this point.
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Rupert Hargreaves 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.