Over a year has passed since the start of the Covid-19 pandemic and although there have been some signs of recovery, economic uncertainty still persists.
That said, there has been one significant development that has given analysts and investors cause for optimism and positivity: the ongoing vaccine rollout.
Although life isn’t quite back to normal yet, vaccine programmes are underway around the world, hopefully speeding up the rate at which societies and economies can reopen. This means many of the stocks that felt a steep downturn due to lockdowns and social distancing measures may be about to experience a revival as businesses and consumers return to some of their pre-pandemic habits and behaviours. It’s likely that changes will be seen across a number of different sectors, and these are just four stocks investors may wish to monitor as the vaccine rollout continues.
Simon Property Group
Mall owners like Simon Property Group have struggled throughout Covid-19 as usual shopping habits were suddenly upended. As well as the government-mandated lockdowns, we’ve also seen stores close and retailers go bankrupt, as well as increased interest in online shopping.
However, it looks like the tide may be turning. The prospect of effective vaccines has brought in a significant rush of buyers — though prices are still far from what they once were. “The current share price remains 50% below its all-time high from July 2016 and roughly 20% below its pre-pandemic levels in 2020,” explains David Morrison, senior market analyst at Trade Nation. “This demonstrates uncertainty around a company focused on US shopping malls. That said, many investors may view this lag as an opportunity to pick up stock on the cheap.”
There is potential for a turnaround, especially given that Simon has managed to do this before, having previously pulled itself out of the economic downturn of the Great Recession. Obviously, this will take significant time, but investors with a long-term focus may be interested in seeing how things pan out, as long as they can ride out what will probably be a bumpy recovery.
Urban Outfitters Inc.
Urban Outfitters Inc. is one of many retailers to have a tough time during the pandemic, having to temporarily close its stores for long periods throughout 2020. In the company’s fourth-quarter fiscal 2021 (year ended January) results, it was revealed that total revenue had fallen by 7% year-on-year and that digital operations are currently more profitable than retail operations.
Urban Outfitters currently has a Zacks Rank #3 (Hold), with the company expecting “an in-line return from the stock in the next few months”. Until the economy reopens completely, digital channels will continue to be very important and Urban Outfitters appears to be poised for success in this regard. As customers are able to return to stores later in the year, apparel retailers have an opportunity to recover some of the market share lost to e-commerce. What’s more, based on the stock’s recovery after the 2007-08 recession, Urban Outfitters is on track to outperform the S&P 500 post-coronavirus.
Live Nation Entertainment
Live Nation Entertainment sells over 500 million tickets per year and has missed out on a lot of revenue due to the fact live events had to be put on hold due to Covid-19. Revenue for 2020 was just $1.9 billion in 2020 compared to $11.5 billion in 2019. However, with so many people keen to return to live events when it’s safe to do so, Live Nation could certainly be a stock worth watching.
Despite the fall in revenue, Live Nation actually surpassed its pre-pandemic share price high in February 2021. “Given the massive social and economic toll that the lockdown has had on the public, we believe there will be strong momentum to reopen society swiftly as soon as vaccines are readily available. And we believe outdoor activities will be the first to happen,” said Michael Rapino, Live Nation president and chief executive. He also pointed to a survey stating that 95% of fans are likely to attend a concert when restrictions are lifted.
While plenty of investors believe that this demand means a surge in revenue and profit is inevitable, there are some that have doubts and have downgraded their Live Nation outlook.
InterContinental Hotels Group Plc
The travel and tourism industry has had a lot to contend with throughout the pandemic thanks to the huge restrictions on international travel. However, the vaccine rollout has left plenty of people feeling optimistic that holidays abroad will be back on the agenda soon, and InterContinental Hotels Group Plc has already managed to recoup all its Covid-19 losses.
Morgan Stanley recently raised price targets for InterContinental in line with the perceived pent-up demand for travel, while some investors have also identified it as one of the FTSE 100 growth stocks to watch — albeit a high-risk one. However, InterContinental group chief executive, Keith Barr, believes that recovery is hard to forecast because it is “totally related to vaccines”. Talking to the Financial Times, he also claimed that fears over permanent damage to business travel were “highly exaggerated”, but didn’t anticipate that part of the market to recover for several years. Potential investors will have to weigh up these factors before considering InterContinental shares.