UK share prices are back on the ascent as optimism around the economic recovery improves. I myself have my eye on several reopening stocks whose profits could be about to explode as Covid-19 lockdowns end. Here are a couple of the best that are on my list today.
Riding the jobs recovery
Buying shares in London-listed recruitment stocks is a great way to ride the economic recovery, in my opinion. And I think Robert Walters (LSE: RWA) is a particularly-attractive reopening stock because of its dirt-cheap price. City analysts think earnings here will rise 180% year on year in 2021. This leaves the company trading on a forward price-to-earnings growth (PEG) ratio of just 0.2. A reading below 1 suggests that a UK share could be undervalued.
Data from the UK illustrates how strongly profits could be about to explode at Robert Walters and its peers. According to the Chartered Institute of Personnel and Development, employers in Britain — a territory responsible for a quarter of Robert Walters’ net fees — are planning to take on staff at their fastest pace for nine years.
I think this particular reopening stock is a great pick for long-term investors too. Asia is Robert Walters’ single largest territory, one which I expect to deliver mighty income growth as economic conditions there boom. But I have to remember that companies like this are only as good as the talent they are looking to find jobs for, however. And a brain drain among its candidate pool versus that of its rivals could hit profits hard.
Another top reopening stock to buy
The flight plan for Ryanair’s (LSE: RYA) recovery remains packed with risk. But I still think it could prove to be a clever buy, despite its current perils.
Covid-19 infection rates across much of mainland Europe have trended lower in recent weeks, leading to hopes that the Irish flyer’s planes could be back in the skies en masse before too long. But there’s a long way to go before the public health emergency is over and spikes like that currently being reported in Britain will be greeted with fresh dismay.
As a long-term investor though, I think Ryanair could be considered a very attractive reopening stock to buy today. Thanks to the €1.2bn Eurobond the company issued last month it retains one of the strongest balance sheets in the industry. I’m confident that it will have the financial might to overcome the Covid-19 crisis and to ramp up capacity quickly as lockdowns are phased out.
Passenger demand for low-cost plane tickets rocketed during the first couple of decades of the century. I’m confident that they will remain the driving force behind the wider aviation industry when the pandemic finally ends too. And this particular reopening stock has a considerable geographical footprint from which to exploit the market to its fullest.