As the weather warms up and outdoor life returns closer to normal, my thoughts turn to June. Can I do the hard work of picking shares for my portfolio now, then put my feet up and enjoy a lazy summer? On my list of UK shares to buy now for my portfolio, I think two companies might benefit from people taking such a leisurely approach to the summer months.
Cider and more
First up is C&C Group (LSE: CCR).
The company name may not sound familiar, but its brands might. The portfolio includes such iconic drinks as Bulmers, Magners, Tennent’s, and Blackthorn.
The company used to focus on cider. Over time it has built a more diversified portfolio. Partly that is about adding other product types, such as beer. There is a commercial logic there. If a lorry is already delivering one product to a customer like a pub, having a fuller range available brings economies of scale.
But C&C’s spread across the value chain hasn’t stopped there. It also owns the drinks wholesaler Matthew Clark and Bibendum. On top of that, it has a stake in pub company Admiral Taverns.
Difficult trading environment
During the pandemic, that made things hard for the company. While home consumption helped mitigate some losses, demand from pubs collapsed. In its half-year results in October, the company shared that free cash flow of £90.9m the prior year had turned into negative cash flow of £28.4m.
With full-year results out next week, I see the shares as ripe for a rerating in June. They have already added 66% in a year. Positive trading news could boost investor sentiment further. The hospitality trade opening up could be a boon for sales. That will hopefully enable C&C to move back into the black in the coming year.
Risks remain, though. Further lockdowns would likely eat into revenues and profitability again. Additionally, pub goers who have got used to cheaper home drinking may return to the pub less than before, which could damage revenues.
UK shares to buy now as June approaches
Also on my list of UK shares to buy now I’d consider for my portfolio is pub operator JD Wetherspoon (LSE: JDW).
The company experienced many of the same challenges over the past year that C&C did. I think it is similarly set to benefit as hospitality venues reopen.
The shares have already added 32% over the past year. I still see these as UK shares to buy now for my portfolio, though. Wetherspoon’s pubs polarise drinkers. But with central locations, competitive ale prices, and a disciplined approach to capital expenditure, I see this as a very competitively positioned company. Its loss last year was the first since the 1980s.
Like C&C, risks include any further lockdowns damaging drinkers’ ability to slake their thirst at a pub. Wetherspoons also had a rights issue last year, and any further challenges to liquidity in future risk shareholder dilution.