As a buy-and-hold investor, I’m always thinking about the long term. That’s why I’m looking at these three very different, but great, shares to buy right now.
Auto Trader
First up is Auto Trader (LSE: AUTO). I already own shares in this digital car sales business. However, I like where it’s going and want to increase my position.
In the past year, Auto Trader’s stock price has risen approximately 25%, from 450p to 565p. While it clearly dominates the car advertising space, it also stands to reap the benefits of a booming industry. This is evidenced in the 39% week-on-week increase in online traffic that Auto Trader experienced when car showrooms reopened across the UK this month. It looks like this British share could return to pre-pandemic levels sooner than expected.
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However, my one concern is that this boom may be short-lived. A societal move to working from home will have reduced many consumers’ need for cars. Less commuting means less need for transport, and after the economic hit the world has taken, perhaps a vehicle is just one more expenditure that can be cut.
Despite this, I’m still bullish on Auto Trader as the economy reopens. I believe that this top UK share is large enough to see out any downturns and continue to grow.
Pets at Home Group
The pandemic has turned Pets at Home (LSE: PETS) into a real growth possibility for me.
In the past 12 months, Pet at Home’s share price has jumped 80% from 244p to 439p. It has benefited from Covid-19 as a total of 3.2 million households in the UK acquired a pet since the start of the pandemic. The BBC even reported a pet food shortage across supermarkets last month!
PETS’ retail stores generate almost 90% of total revenue, with more than half of that from pet food sales alone. And despite Covid-19 related restrictions, revenue has continued to grow by 17.5%.
I have one very real concern about the company’s lack of distribution centres. It only has two of them, serving the north and south of Britain. If a disaster were to occur at only one of these sites, it would cause massive supply issues and cost a huge chunk of revenue.
However, I’m optimistic about PETS and believe that it will benefit from a generational move towards higher pet ownership and interest in pet wellness.
Saga
Things look promising for Saga (LSE: SAGA) too, I feel. Saga shares have risen more than 60% in the past year, from 221p to 357p.
With vaccinations underway, the travel and insurance group’s core customer base of over-50s — who are typically loyal and have more money to spend — are spending again. Following a dismal 2020 due to Covid-19, cruise bookings have risen 20%, indicating a pent-up demand for travel. For 2021/22 and 2022/23, it has £154m of total cruise bookings, up from £128m year-on-year.
I do worry about the company’s growing debt though. As of January 31, the company had long-term debt of around £820m on its balance sheet versus equity of £681m. This adds risk to the investment case, particularly given uncertainty in relation to the travel division.
The optimist in me truly believes that over-50s travel will be a huge market following lockdown, however. Saga could be a risky but profitable investment for me right now.
