Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Five stocks set to win from the end of lockdown
These are the top five stocks for the reopening of Australia post-Covid lockdowns:
- Helloworld (ASX:HLO)
- Lion Energy (ASX:LIO)
- Crown Resorts (ASX:CWN)
- Event Entertainment (ASX:EVT),
- Scentre Group (ASX:SCG)
Victorians, already suffering from the harshest lockdown laws in the world, will finally enjoy a bit of respite with a modest easing to rules kicking in over the weekend after the state hit its 80 per cent first dose vaccination target.
Even with the modest easing, there has been a gradual increase in the traffic and number of cars travelling on Melbourne’s freeways, a sure indication that the end is close. New South Wales is likely to reach the 80 per cent threshold by the weekend, which will trigger its next phase of reopening on Monday, just one week after the lockdown was eased.
In this article, we’ve listed five companies that stand to benefit from an easing of lockdown restrictions and movement between states and countries.
- Helloworld (ASX:HLO) – Covid-19 decimated travel plans on a global scale as people began to retreat to the confines of their homes. With most of the population at home, the travel industry went into hibernation affecting airport, airline and travel stocks. A total of 217 countries and territories worldwide have imposed travel restrictions, as shown in the chart. As borders re-open, the reverse is true. People will slowly begin to travel again. Passenger numbers along with airport and airfare revenue will rise. With very tight cost management, HLO has been able to keep losses to a minimum. Upon attaining 80% vaccination rates, management feels international travel will return during 2H22. Morgans expects earnings will fully recover in FY24.
- Lion Energy (ASX:LIO) – With the world shifting to all things green, Lion Energy is one of the “green hydrogen” producers positioning itself to be an early mover in Australia. Lion is evaluating the potential for building a network of modular hydrogen production and refuelling stations across Australia, with an initial focus on Queensland. It proposes to supply hydrogen fuel to meet the impending demand from bus fleet operators.
- Crown Resorts (ASX:CWN) – Hit hard by corruption and money laundering investigations, it’s been a tough year for the casino operator, which has not only come under fire for illegal activity but had its entire board and CEO removed. It’s share price to follow. The recent appointment of Anne Ward to an independent non-executive director position will bring rich experience from her extensive board and executive careers at NAB, Red Bubble and MNF Group. Her appointment further strengthens the mix of capability and experience in Crown. It will be a long path to recovery, but as lockdown restrictions ease, people will return to the once-popular entertainment venues.
- Event Entertainment (ASX:EVT) – Formerly Amalgamated Holdings, the event operator looks after Rydges Hotels, Thredbo Alpine Village, Event cinemas, Moonlight cinemas and Greater Union cinemas. Shares have already had a decent run, rising by 69 per cent in the year. Its recent result was heavily impacted by Covid-19. However, despite these restrictions, the company achieved a positive EBITDA. With cinemas opening globally, blockbuster films will start to premiere, driving demand back to its pre-Covid levels. There should be a swift and strong rebound in the hotels, and the Thredbo business as well.
- Scentre Group (ASX:SCG) – Right now, listed property companies are in a better position to benefit from this reopening trade because they haven’t returned to pre-Covid levels . The hardest-hit sectors when Covid-19 first emerged were shopping centres and office spaces, retail and hospitality. The S&P/ASX 200 AREIT Index (ASX:XPJ) is trading below its pre-Covid level and below the S&P/ASX 200 Index. And it’s no surprise. The Melbourne and Sydney CBDs, usually bustling with people, were turned into ghost cities overnight when lockdowns were first put in place. Shopping centres and office buildings were left empty. With no foot-traffic, retailers were forced to shut up shop. The effect is still being felt today. Scentre Group is a shopping centre giant with retail destinations operating under the Westfield brand in Australia and New Zealand. With a return of foot traffic, most shopping centre precincts will see an immediate recovery.
The pandemic looks to have hit its peak both here and overseas. Because the share market reflects future earnings usually months out, the market has already moved on, to a post-Covid world. This trend will only accelerate once economies begin to open. A simple glance at some of the Covid-losers will see them rebounding sharply. Aviation stocks, airports, shopping centre and commercial REITs (as people return to work), casinos and hospitality stocks all stand to benefit from an easing of lockdown restrictions.
