The Reserve Bank believes the economic recovery has been “delayed but not derailed”. Other more bullish observers believe that, once the lockdown ends, we’ll be hit by a wall of money.
According to The Financial Review, Australians sitting at home have saved a massive $20 billion they intend to splurge on revenge spending to get their own back on the pandemic.
Restaurants and bars have been closed as has most retail, and no-one has gone out to a party or a musical performance in months, let alone get on a plane to travel.
This is very much the theme among sharemarket analysts at the moment as they judge which of the COVID losers could become post-COVID winners.
This column has already discussed some of the travel stocks which might be worth a look, and we’ve also mentioned office property and unique businesses such as United Malt Group, which provides yeast for craft beer and is already benefitting from the re-opening the US where it exports much of its product.
A look at the US experience, in fact, could also give us an indication of what is likely to happen here because that highly vaccinated population is out of lockdown already. There, the cruise ship business is booming, passenger numbers at airports are increasing, gym memberships are soaring and Las Vegas casinos are back in style.
In terms of shares you can buy in Australia to replicate these themes, here are some stocks to look at.
How about Canberra based gym owner Viva Leisure? That company has had a cruel ride, listing on the ASX in June 2019 just before COVID hit.
Viva shares predictably went into a slump with COVID but gained sharply during the first re-opening last year and hit $3.39 in December 2020, only to fall again due to Delta. Investors are liking Viva right now and the shares are on the way up, but at $2.24 they could have some distance to go.
We’ve already talked about travel stocks and mentioned how Qantas might be a buy, but there are other lesser known aviation companies which could also be on the way up.
One of these could be Alliance Aviation Services, which does charter flights for corporates, tourism operators and much of the fly-in fly-out workforce. At $4.20, the shares are taking off but perhaps they are just still on the runway, yet to get fully airborne.
Another big lockdown has been the impact on young people, many of whom are desperate to get out there and start living their lives again. Following this theme, one stock to benefit could be retailer Universal Stores, which sells casual clothes for a younger market.
The shares climbed to $8.05 in May, just before Delta hit, and are now at $7.40. With summer and Christmas coming, you would think Universal is well positioned to benefit from the expected explosion in retail sales.
A left field suggestion could be skydiving operator Experience Co, which was doing quite well before the new lockdowns and could be the beneficiary of pent-up demand when life returns to normal, and as international tourists return.
Experience is a micro-stock, but still offers potential upside when you consider that its 5 year high was 88 cents in December 2017, and it’s travelling at 34 cents this week.
These are just a few suggestions on what to look for, but the theme is clear: look for industries which have been hit by COVID but are on the brink of re-opening and getting back to normal, find some listed companies in this sector and look at how their shares are performing.
If you think they are undervalued and are set for take off, then you might be able to add an investment bargain to your portfolio.