As the prices of FTSE 100 stocks have run up in the past few months, I increasingly look towards small-to-mid-cap UK shares to add to my portfolio for capital growth. Here are two I like.
Hollywood Bowl is raring to go
Hollywood Bowl Group (LSE: BOWL), as the name suggests, is a bowling alley operator in the UK. Needless to say, it has been impacted by the pandemic. Its half-year results this week showed revenue down to a fraction of what it was during the corresponding half of last year and it turned in losses as well.
But when mulling whether to buy the stock or not, I focus on whether and how much its business picked up during the time it was operational. To that extent, I am encouraged by the fact that it reported profitable trading after the first lockdown.
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In the same update, it sounded upbeat about the reopening from May 17 onwards. In fact, it is planning further expansion of business, which is in stark contrast to other reopening stocks that have struggled through the lockdowns. It is set to open 18 new centres by 2024.
In sum, it looks like Hollywood Bowl has managed the challenging time well. It is now ready to move forward at speed. While I am still concerned about the impact that last year’s closures have had on its long-term financials, I think there is comfort to be drawn from the fact that it was a financially healthy company pre-pandemic.
What I am doing now
Further, in some of my previous articles I have said that an expected economic boom is likely to be very favourable for consumer stocks. Hollywood Bowl would be no exception. That is especially so, keeping in mind the pent-up consumer demand because of the lockdowns.
Its share price has already run up quite a bit though. In November 2020 alone, as vaccines were developed, it jumped by 50%. In the past year, it has risen by more than 68%. While this is a sign of investor confidence in the stock, it also makes me wonder how much more the stock can rise.
I like it, but just to be sure, I think it is a good idea to wait for a post-lockdown update before taking a position.
Vistry Group has a bullish outlook
In the meantime, I would consider somewhat safer stocks like the housebuilder Vistry Group (LSE: VTY). I had flagged it a few months ago as a stock I could buy this year. After its latest trading update I am even more convinced.
For 2021 so far, the group has reported strong demand and that was evident in its sales numbers. I especially like its strong forward sales position. It now expects its half-year performance to be significantly ahead of its earlier expectations. With bullish statements like these, it is little surprise that this UK share has been rising.
However, the property market could deflate as encouraging government policies are withdrawn later in the year. That said, there is also a likelihood that a pick-up in the economy could make up for this. I continue to like the Vistry Group stock.
