Which FTSE 100 shares to buy when a Covid-19 vaccine is rolled out

Retail, property, travel and leisure have been earmarked as the sectors most likely to benefit strongly from today’s announcement of a breakthrough in the race for an effective Covid-19 vaccine.

Which FTSE 100 shares to buy when a Covid-19 vaccine is rolled out
Pfizer and partner BioNTech’s breakthrough sent the FTSE 100 soaring by more than 5% early this afternoon, sending an extra jolt through global markets already frothing from Joe Biden’s US election victory.

The exuberance cascaded through the markets, lifting stocks hit hardest by the pandemic and cascading down the supply chain. 

Amidst the all-round euphoria, analysis by investment bank Peel Hunt has identified companies are most likely to benefit from a return to normal. 

Among early winners today were:

Informa (up 110.30p to 567.00p), the specialist conference provider soaring by more than 20%, amid hopes real rather than virtual events will soon be staged once again. 

Primark owner, Associated British Foods which has been hit hard by forced closure of its stores also rose steeply (up 310.50p to 1,980.00p), in the expectation that any future lockdowns would be more limited in scope. 

Energy giants BP (up 31.05p to 230.91p) and Shell (up 123.40p to 1.131.40p) were big gainers, with the forecast that global growth and demand for oil can stage a sharper recovery. 

Meanwhile, in travel BA-owners IAG (up 27.19p to 130.79p), aircraft engine manufacturer Rolls Royce (32.64p to 102.20p) and easyJet (up 183.80p to 716.40p) enjoyed welcome breath of air beneath their wings.

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Companies to watch in a world after Covid

In the consumer sector, supermarket sandwich maker Greencore (up 24.3p to 114.9p) and Bakkavor (up 6.28p to 71.48p) have been hardest hit by the pandemic. Bakkavor, which makes ready meals, salads and pizza, is more likely to enjoy an early lift, being less exposed to expected long-term changes in consumer behaviour and working from home. 

In financial services, UK lenders most exposed to consumer debt are likely to benefit as the threat of long-term unemployment lifts, along with a reduced likelihood of future lockdowns, business closures and bad debt.

Companies to watch include Virgin Money UK (up 13.55p to 113.55p), which has crashed 52% since March, and Secure Trust (up 21.72p to 771.72p) which was down 54% year to date 

Big UK banks are also expected to join the rally with Lloyds (up 4.04p to 31.40p), Barclays (up 16.68p to 126.10p) and NatWest Group (up 13.20p to 138.05p). 

Specialist lenders, such as Provident Financial (up 44.80p to 285.80p) have adapted to a new remote way of working but will nevertheless benefit from meeting customers face-to-face.

In the housing market, housebuilders and estate agents were already leading the way in recovery before today’s news having escaped a second lockdown, but fewer restrictions on building sites could help increase activity, with Berkeley Group up 268p to 4,611.52 and Bellway up 348p to 2,901.62p. The wider recovery of the housing market will lift estate agents in general, but Foxtons (up 2.85p to 38.55p) is most likely to benefit from a return to city centre living. It saw Q3 revenue down 10% on the previous year.

In healthcare, independent provider Spire (up 5.33p to 135.93p) will benefit from any return to elective surgery in the NHS after a near total suspension during the height of the pandemic. 

The insurance industry has been hit by a cataclysm from the crash in economic activity, the credit risk from a double-dip recession and event cancellations. RSA Group (up 0.20p to 649.20p) is well positioned to bounce back after a two-year restructure. Saga (up 41.52p to 176.02p), whose income has largely been derived from its insurance arm, is likely to see a recovery if restrictions are eased allowing cruise holidays to restart next spring. The vaccine is expected to be rolled out first to the elderly, its core demographic. 

A vaccine is expected to drive a recovery in mining, as demand returns to normal across the board, and a consumer-led recovery sets wedding bells ringing once more for diamonds and gold. Anglo-Pacific (up 6.20p to 108.00p), Petra Diamonds (up 0.12p to 1.52p) and Hochshild Mining (down 37.40 to 233.19) - still being hammered by the lockdown in Peru - all worth investigating.

Loosening of travel restrictions will unlock demand for Oil & Gas, with the oil price most likely to rise. Tullow Oil (up 2.23p to 20.42p) and Premier Oil (up 1.06p to 12.86p) both having high oil weightings. 

Retail will profit from a footfall recovery in town centres, a return to browsing and shopping as a leisure activity and the dawning realisation we can’t go to work in loungewear. Dunelm, Naked Wine and Gear4Music have all tapped into the home-shopping boom, and a return to the high street is unlikely to lose all their new custom.

Greggs (up 275.51p to 1,617.50p) and WH Smith (up 344.00 to 1,373.00p) are among retailers to have fallen the furthest, but are forecast to emerge from the pandemic as stronger businesses. 

Any recovery cannot come too soon for the battered travel sector. Airline stocks are already rallying in anticipation that restrictions will be lifted by next summer’s peak, and will continue to rise from historic lows. IAG (up 36.02 to 139.65p) and easyJet (up 181.46p to 714.06p) were among today’s biggest risers, as was engine maker Rolls Royce (up 41.29p to 110.85p).

In leisureHollywood Bowl (up 36.50 to 167.00) and Ten Entertainment Group (up 35.59 to 176.59) saw their share price halve due to Covid. Pent-up demand once a vaccine is in place set to fuel their recovery.

Cinema groups have also been hit by a double whammy, with diminishing crowds seeing the plug pulled on a string of blockbuster releases; Daniel Craig’s final out as James Bond chief among them. Cineworld has risen 10.09p to 38.91p. 

There is a full rundown of pubs, leisure and hospitality sectors here.

A spokesman for Peel Hunt said: “We believe there is likely to be a gap of many months between the first announcement of approvable vaccine trial data and the roll-out of mass vaccination programs. 

“Even then, it is unlikely that vaccination “solves” the pandemic – it will be one of several tools required to re-open economies. Encouragingly, all respiratory pandemics in the last century were followed by strong economic rebounds, whether or not mass vaccination programs were implemented.”

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