I’m on the hunt for top ‘reopening shares’ to buy as Covid-19 lockdowns in the UK ease again today. Here are two on my Stocks and Shares ISA watchlist.
Getting ready for take-off
I’d need to swallow a large dollop of risk when buying easyJet (LSE: EZJ) shares. The ‘third wave’ of Covid-19 infections means that social and travel restrictions in Europe continue to emerge. The battle against the pandemic is far from over, and it’s too early to predict when the UK airline share’s planes will take to the skies in large numbers again.
But on the plus side, I think easyJet could still prove a lucrative reopening share for long-term investors like me. First and foremost, the business has issued bonds and signed leaseback agreements for its aircraft to help it stay afloat during the ongoing pandemic.
And by the look of things, market conditions are still extremely bright for the likes of easyJet. The low-cost travel market is expected to resume its rocketing growth of recent decades when the public health emergency is over. On top of this, the survivors of the current industry crisis will reap the fruits of reduced competition that will boost long-term revenues and profit margins.
A word of warning, though. Over the weekend French lawmakers voted for a ban on many domestic flights to help it meet carbon emissions targets. The aviation industry is a major contributor to greenhouse gases. So this action could be replicated in other countries as the fight against climate change intensifies, developments that would clearly damage easyJet and its ability to go about its business.
Another reopening share on my radar
I also believe that Hollywood Bowl (LSE: BOWL) is an attractive reopening share to buy today. As the name suggests, this UK stock operates ten-pin bowling centres. In fact it operates 64 centres today, giving it a market share north of 20%. It’s well placed to ride the soaring popularity of bowling in Britain, a market that expanded 23% in the five years to 2018, according to Mintel analysts.
Bear in mind that Hollywood has ambitious plans to grow its share of the market, too. It plans to resume its strategy of adding two bowling centres to its portfolio each year from 2022. And the business recently raised £30m via a share placing to help it exploit its healthy pipeline of new centres.
There are a couple of risks that I need to be aware of with this reopening share, however. Hollywood Bowl’s centres are due to open their doors to the public again on May 17. But of course, the emergence of a third wave of Covid-19 cases here could put paid to this date. In addition, this UK share doesn’t have a wide geographic footprint as it operates solely on these shores. This could put earnings in significant danger if local interest in ten-pin bowling begins to wane.