I reckon we’ll see a pretty strong stock market recovery this year as recent news regarding vaccine efficacy is ever more encouraging. The results of a new study suggest the Oxford-Astrazeneca vaccine may have a substantial effect on transmission of the coronavirus. Also, first dose vaccinations have been given to around 10 million people in the UK at the time of writing.
This all bodes well for a reopening of the economy, in my opinion. And what’s the first thing many people would like to do post-lockdown? I reckon social activities, holidays and parties will be high on to-do lists later this year.
What does this mean for UK shares?
Shares prices tend to look forward several months to anticipate future supply and demand. So I think it’s important for me not to wait until an economic recovery is fully underway. I’m encouraged with recent progress and am considering several UK shares that could benefit from an economic bounce-back.
The first thing I want to do is go on holiday, as do many others. I’m convinced there will be pent-up demand for holidays this year. The UK shares that I’ve been buying throughout the crisis include Jet2 (LSE: JET2).
Jet2 is a package holiday provider that was popular pre-pandemic. Before the crisis hit, its business was growing and the brand was becoming stronger. The crisis also removed some of its competition, leaving Jet2 in a potentially stronger market position.
That said, I know the share comes with risks. They include the possibility of new variants of the virus potentially delaying economic recovery. Also, even if much of the UK population is able to travel, some countries may not be in a position to receive visitors.
Celebrate with cake
Another recovery idea from my top UK shares watchlist is based on my expectation of more parties and social gatherings in the second half of 2021 and beyond. With restrictions in place for 12 months, birthdays, anniversaries, and other celebrations have been cancelled or postponed.
I anticipate celebration cakes could be popular once gatherings are permitted again. One company that comes to mind that specialises in this area is Cake Box Holdings (LSE: CBOX). This franchise cake shop retailer is a well-run operation, in my opinion.
I like that it has excellent quality metrics. For instance, highlights include a return on capital of over 30%, earnings growth of 31%, and operating margin of 20%. It even provides a 3% dividend.
I like that the CEO owns over 30% of the company. But the shares can be a bit illiquid, which can make larger purchases and sales more difficult. A potential risk is whether management is able to find enough suitable locations for new outlets. Additionally, similar offerings and increased competition from supermarkets could be an issue.
But overall, I reckon the future looks promising for Cake Box and I’d be happy to have a taste by buying a small portion of shares.