UK investing: Sectors to watch

Equities
Investments

While the pandemic has by no means ended, there is hope that the UK economy will reopen fully in the second half of 2021. With that in mind, here are some sectors that have been eyeballed as holding great growth potential from a UK investing standpoint. 

Sectors to watch for UK investing strategies 

Airlines 

The ins and outs of international travel are still being straightened out, but the airline industry and its related infrastructure and suppliers may be about to take to the skies. Of course, this all depends on not just internal policy, but the willingness of other countries to accept tourists, but with travel restrictions loosening, there is high potential in airline stocks. 

In terms of what this means for investors, we can use EasyJet as a case study. The orange discount airline has, like many, had a turbulent time in 2020 and into 2021. However, the stock has provided absolute returns of 22.6% over the past year. The Marketsx in-platform trader trends tool has EasyJet on a 96.9% bullish rating. 

Stocks like Rolls-Royce, one of the airline industry’s key engine suppliers, are also stocks to watch. It currently holds a 99.3% bullish rating on the Marketsx trends tool. 

Renewable energy 

Over $122bn was invested into green energy projects in the UK between 2010-2019. More funding is on the way. The world’s largest offshore windfarm is currently under construction in Dogger Bank off the east coast. Some £12bn has been pledged by the UK government for future renewable projects, but PricewaterhouseCoopers forecasts the government’s 10 point “green energy revolution” plan may cost upwards of £400bn to implement. 

A lot of capital is being poured into clean power generation. Wind is a priority, but so is solar energy, tidal and other forms of renewable energy.  

As well as owning stocks in the likes of SSE, which has committed to triple its green energy output by 2030, investors may look into various funds centred on renewables. For example, the NextEnergy Solar Fund offers a dividend yield of 6.5%, while the Gore Street Energy Fund offers a yield of around 6.7%. 

Oil & gas 

While the future is green, don’t be too quick to write off oil & gas stocks when looking into UK investing and trading strategies. Oil prices are currently trending at some of their highest levels for years. Demand for oil is forecast to soar in the second half of 2021 as the world navigates out of the Covid-19 pandemic. 

With that in mind, oil & gas still has potential for investors. Take BP as an example. Goldman Sachs recently identified the stock as one a potential reopening winner with post-pandemic upsides of a huge 45%. 

Many supermajors are also looking to futureproof themselves with business investment in renewables and attempting to clean up their act. Look at BP. It has 23 GW of clean power projects in the pipeline and has committed to net-zero carbon emissions by 2050, so may morph over time from oil & gas stock to renewable stock. Certainly, one to watch with interest. 

Hospitality 

Hospitality includes live entertainment, pubs, clubs, restaurants and so on. Naturally, due to lockdown, the sector has suffered over the course of the pandemic. But there is light at the end of the tunnel. Pubs and restaurants are now offering seated service inside in addition to al fresco options. There have even been some pilot schemes for live events, not least the 10,000-strong Download music festival. 

With the reopening of the UK economy, although the lifting of full restrictions has been pushed back to July, hospitality stocks could be poised to boom. 

For instance, the Wetherspoons share price gained 45% in the run up to April’s relaxation of dining restrictions. Other pub stocks, like Martson’s have made even greater strides. In Marston’s case, it had made 106% in the six months up to May 2021. 

With the Delta variant spreading, however, the UK may be forced back into lockdowns. So, while hospitality stocks have potential, proceed with caution, although that goes without saying when pursuing UK investing. 

Risks of UK investing 

Whether pursuing business investment, retail trading, or other activities, UK investing comes with risks inherent to all forms of financial speculation. All such activity comes with the risk of capital loss. Always be sure to do your research prior to committing any money and only do so if you are comfortable taking any potential losses.