Summer 2021 is all about major sporting events after summer 2020 saw them being cancelled. We’ve had Euro 2020 and Wimbledon. And the Olympics are still to come. Let’s look at some UK shares that may have benefited and could continue to do.
In the UEFA Euro 2020 championship, with England reaching the final, there was a significant jump in spending in bars, restaurants and pubs around the country. Also, with a relaxing of Covid restrictions and periods of good weather, Britons flocked outdoors for BBQs and picnics. That was reflected in supermarket sales where spending increased by 19% last month.
Figures from Barclaycard suggest there was a surge in spending in June of 11.1% compared to the same period in 2019. Some of this can be attributed to sporting events, and some was due to a rise in UK staycations and a relaxing of restrictions.
UK shares in the spotlight
For investors in UK shares, the summer isn’t over yet. The further easing of restrictions could prompt many to get out and socialise over the coming months. And there’s more sport to come in the hopefully sunny months ahead.
This all bodes well for J Sainsbury (LSE:SBRY), in my opinion. The shares are up by 45% over the past 12 months, but I think they’re still worth considering. Food and drink for those watching sport (either in person or on TV) could give the supermarket a summer boost. Added to that, supermarket shares have been in demand of late following the takeover interest in Morrisons and speculation that its rivals could be targets too.
Could Sainsbury”s be the next to receive a bid? Quite possibly, in my opinion. With a market capitalisation of £6.35bn and a price-to-earnings ratio of just 13, I reckon it’s fairly cheap. Also, its earnings are growing and it offers a generous 4% dividend.
That said, there’s plenty of competition in food retail and profit margins are thin. Although earnings are growing for now, it can be difficult for food retailers to do so consistently. But all things considered, I’d buy some of these UK shares to add to my Stocks and Shares ISA.
One to watch
Tournaments like Euro 2020 and the Olympics attract millions of viewers. In fact, viewing figures suggest that around 30m people watched the Euros final, excluding those watching on catch-up services. This will have been good news for British broadcaster ITV (LSE:ITV).
I like to own some UK shares that pay a dividend. In particular, the dividends should be well covered by earnings. And events for which ITV can charge an advertising premium make me think its dividend payments aren’t at risk of being cut in the near future. ITV offers a dividend yield of 4.4%.
As restrictions ease, ad revenues should continue to rebound too. A strong schedule of summer sports (and Love Island) should support earnings.
It’s worth pointing out that the economic recovery faces some risks. The path for Covid-19 can change and a return to restrictions could be a concern for ITV. Longer term, traditional broadcasters face competition risks from online-only platforms. ITV will need to stay relevant as viewing habits change.
Overall though, I like ITV’s dividend and the sport-based catalyst for earnings growth. It’s a cheap share in my opinion, and I’d consider buying it for my portfolio.