Reasons to be really rather cheerful at present include the prospect soon of a night out, a staycation, or maybe even a trip abroad.
The nation is ready to get dressed up and strut its funky stuff, or at least go down the pub.
While planning how you will celebrate June 21, when clubs and restaurants are due to re-open, there is also fun to be had from spotting the shares and sectors that should be boosted by the pent-up desire to be wined, dined and entertained.
Supporting the feel-good mood will be the vaccine roll-out and the ‘fiscal firepower’ pledged in this week’s Budget.
Even before the Chancellor’s speech, there was a leap in the shares of such companies as Carnival, the cruise operator, British Airways owner International Airlines Group, Wetherspoon, the pub chain, travel group Tui and the hotel business Whitbread.
They are all forecast to prosper from a summer spending spree financed by the £180billion in lockdown savings that will have been amassed by people working from home by the summer.
Rishi Sunak’s measures should help those in less secure circumstances feel more able to treat themselves.
But when choosing which companies should do well from lockdown lifting, it’s wise to take into account the changes in tastes and habits during the months of staying at home. We may not party again like it’s 2019 – or at least not straight away.
Giles Parkinson of Aviva Investors says: ‘You have to look not only in the rear-view mirror, but also through the front windshield.’
Taking off?: British Airways has cut costs and boosted its liquidity
For example, British Airways has cut costs and boosted its liquidity. But Parkinson says: ‘Business travel may be permanently impaired, as executives stay in contact on Zoom. Flying will be for meeting new customers, not existing ones – which is why one of the largest holdings in our Global Endurance Fund is Relx, whose businesses include conferences. Those will be the places to meet new customers.’
On the basis that it could pay to look beyond the obvious names. Parkinson considers Heineken a better bet than Wetherspoon. The world’s second largest brewer has suffered from the closure of hospitality, but its shares do not reflect its shift towards low- and no-alcohol beers, ideal for those who embraced healthy living in lockdown and will be sober party animals.
DIY has been another craze. Laura Foll of Janus Henderson, co-manager of the Lowland, Henderson Opportunities and Law Debenture trusts, believes that lockdown savings could fund larger projects, since confidence in the property market will be bolstered by the Budget stamp duty holiday extension. She picks Lloyds, one of those lenders offering the 95 per cent guaranteed mortgages, also pledged in the Budget.
Foll’s other picks include Headlam, Europe’s largest carpet and flooring distributor. Two-thirds of its sales go to domestic customers.
As we look forward, it’s useful to observe events in China and Australia where restrictions have already eased. It seems people are indulging themselves – but slightly differently.
Back in fashion: Shoppers keen on evening gowns will boost Burberry
Swetha Ramachandran, luxury goods investment manager at GAM, says that shoppers, weary of loungewear, want evening gowns, which is good for Burberry and for Gucci, part of Kering. But, significantly, there has been a shift: ‘Lockdown has also increased concerns about sustainability and impact in accessories. People are showing signs of wanting to buy less, but buy better.’
She says that this should be good for Louis Vuitton, a brand in the LVMH stable. This stock is a top 10 holding at Fundsmith which also owns Estee Lauder, whose lipsticks and serums will be sought after for post-lockdown events.
Terry Smith, its manager, seems persuaded that we are keen to spoil ourselves, a view I share which is why this fund is in my portfolio.
As we learnt in the Budget, the economy is forecast to grow by 4 per cent this year and 7.3 per cent in 2022, underlining the forecast that the billions in lockdown savings will be put to use.
If you are still unsure about where and how people are going to splash out, Darius McDermott of Fund Calibre suggests the Ninety One UK Special Situations Fund which has stakes in builders merchants, Easyjet – and Next, for that June 21 outfit. Excited? I certainly am. –
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