I think now could be a great time for Stocks and Shares ISA investors to buy UK shares. There are many top stocks out there whose profits could soar when Covid-19 lockdowns end. These ‘reopening stocks’ have the potential to rocket in value in the months and years ahead.
Of course, investors need to be extremely careful before buying these stocks. The global pandemic remains far from beaten, and many UK shares carry huge debt piles following earlier lockdowns. Still, I think there are great opportunities for those who do their research before buying reopening stocks.
A ‘picture perfect’ reopening stock
I’ve explained in detail why I’d be reluctant to buy Cineworld shares today. The company’s gargantuan debt pile, allied with the growing threat posed by streaming services like Netflix, make this particular UK reopening stock a risk to far for me.
That said, I’m considering buying Everyman Media Group (LSE: EMAN) before the upcoming ISA deadline. This is because this operator’s cinemas offer a more luxurious viewer experience than the bog-standard theatres the likes of Cineworld can. It’s therefore much better placed to tempt people off their sofas following Covid-19 lockdowns to catch a movie.
As analyst Susannah Streeter of Hargreaves Lansdown comments: “The footprint of the large cinema chains is set to contract further and there is likely to be a refocus on smaller more luxury venues, providing a high-end cinema experience people are unable to get at home.”
Of course, Everyman isn’t immune to the dangers posed by the streamers. What’s more, this reopening stock’s near-term recovery might take an awful whack if a fresh wave of coronavirus infections prompts further lockdowns and previously-eager movie lovers choose to stay away.
Encouragingly though, the business has just boosted its debt facilities to help it ride over any near-term speedbumps. And I think the company’s dedication to provide a premier viewing experience allows it to bounce back strongly when the pandemic passes.
I believe that Ten Entertainment Group (LSE: TEG) is another attractive reopening stock to buy before April’s ISA deadline. I’ve tipped this particular UK share before because the popularity of ten-pin bowling has ballooned in recent years. And by the looks of things, this renaissance remains in very rude health despite the pandemic. Ten Entertainment said this week it experienced “strong demand in the summer when the business reopened after [the] first lockdown.”
Like Everyman, this UK share has a very robust balance sheet to help it sail through any further pandemic-related problems. It had £18m of liquidity headroom as of last week.
It’s quite possible that the current bowling craze could run out of steam once more. But I think this popular form of entertainment has more life left in it. Besides, Ten Entertainment has invested huge amounts in its network to keep the punters rolling in.
Savvy investors like you won’t want to miss out on this timely opportunity…
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Not only does this company enjoy a dominant market-leading position…
But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!
And here’s the really exciting part…
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.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Netflix. 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.