Stay-at-home stock plays for the new UK lockdown

Published Wed, Dec 23 20205:10 AM EST

LONDON — With millions of Brits forced to stay indoors over the Christmas holiday, strategists are keeping a close eye on some stocks they say could get a boost. British Prime Boris Johnson effectively cancelled Christmas plans for much of the country and put over 17 million people under strict lockdown rules — with more areas are likely to follow. It comes after scientists warned of a new variant of the coronavirus that is thought to be much more transmissible than the original strain. The economic impact of the measures is expected to benefit certain stocks in the "stay-at-home" theme. Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, identified seven stocks to watch as the U.K. grapples with the spread of the virus. "With many restaurants forced to close their doors to diners yet again, the appetite for takeout food is expected to increase over the next few weeks, which should be beneficial for food delivery giant Just Eat Takeaway ," she told CNBC. She added that supermarkets offering home delivery, such as Ocado , Sainsbury's and Tesco , "will be in demand," but warned that investors should be cautious about the risks posed by international travel bans. Over 40 countries have suspended transport links to Britain due to fears over the new Covid strain. France imposed a ban on freight arrivals from the U.K. , a move that led to lorry back-ups in the English county of Kent. It has since relaxed the ban , and now requires passengers arriving at the border to have a negative Covid test result. The bans have led to worries that U.K. grocers could suffer supply chain disruptions, with supermarkets like Tesco and Sainsbury's warning there could be gaps on shelves if transport ties with mainland Europe aren't quickly restored. Another retailer that could benefit from the lockdown situation is discount store chain B & M , according to Streeter. "Because it sells food it is classed as an essential retailer and won't be forced to close, and shoppers browsing its ranges are likely to make impulse purchases on of items they can't buy elsewhere," she said. Meanwhile, an "obsession with cleanliness" could "boost the fortunes" of U.K. consumer goods giant Unilever , Streeter said, adding that the stock has "already been a popular share to hold during the pandemic as is likely to continue to be well into 2021." One slightly more unusual name to watch is property investment and development firm Segro , Streeter said. The company, which focuses on the logistics and warehousing sector, has benefited from rising demand for online shopping caused by Covid. Russ Mould, investment director at AJ Bell, agreed that names like Ocado and Just Eat Takeaway could benefit from the lockdown. In addition to Unilever, he highlighted that Reckitt Benckiser was a standout performer in European equity markets this week thanks to its portfolio of cleaning products like Dettol. Mould highlighted that while defensive, work-from-home and growth stocks outperformed in the first half of the year, "cyclical growth and recovery shares — such as banks, travel firms and commodity producers — have done better in the second half." "If the pandemic persists and economies roll over, we may see a switch back to expensive defensives and secular growth plays, such as tech and biotech," he said. "If the vaccination programmes help to contain the virus, build public confidence and give economic activity a push back to something like 'normal,' then cyclicals could stay in vogue." Mould added that gold and bitcoin could also benefit as a hedge against inflation if the pandemic lingers and leads to higher government borrowing and central bank stimulus. "Some investors are understandably casting around for havens that will protect purchasing power at a time of rampant money creation, especially if they sympathise with Nelson Bunker Hunt's maxim that 'Almost anything is better than paper money. Any fool can run a printing press,'" Mould said.

A pedestrian walks past an NHS COVID-19 information board, alerting people that London is in Tier 4 coronavirus restrictions, England's strictest measures, in central London on December 22, 2020.

Tolga Akmen | AFP via Getty Images

LONDON — With millions of Brits forced to stay indoors over the Christmas holiday, strategists are keeping a close eye on some stocks they say could get a boost.

British Prime Boris Johnson effectively cancelled Christmas plans for much of the country and put over 17 million people under strict lockdown rules — with more areas are likely to follow. It comes after scientists warned of a new variant of the coronavirus that is thought to be much more transmissible than the original strain.

The economic impact of the measures is expected to benefit certain stocks in the "stay-at-home" theme.

Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, identified seven stocks to watch as the U.K. grapples with the spread of the virus.