The stock market has been volatile recently. With rising interest rates, soaring inflation, and surging energy costs, the broader economic outlook seems rather uncertain. Despite all this, I think that easyJet (LSE:EZJ) and Rio Tinto (LSE:RIO) are two UK shares to buy with a spare £1,000. Let’s take a closer look at why I would buy these companies at the moment.
Is easyJet clear for take-off?
easyJet is an airline specialising in short haul flying around Europe and North Africa and is currently trading at 423p.
Unsurprisingly, the firm was battered by the pandemic. Entry restrictions and the closure of borders meant that international travel ground to a halt for months on end.
For the year ended September, between 2020 and 2021, the business reported pre-tax losses of £1.2bn and £1bn, respectively. While these are losses on a huge scale, they have narrowed slightly over time.
As if the pandemic wasn’t difficult enough for the firm to navigate, it now has to deal with surging demand as more people want summer sun in Europe’s hotspots.
To cope with the pandemic, however, the business cut a large number of cabin crew. It is now offering a £1,000 sign-on bonus to recruit staff. easyJet is caught in a race against time to find enough cabin crew or face the risk of having to cancel many more flights this summer.
On a slightly more positive note, the airline did expect passenger capacity to reach 90% for the three months to 30 June. So its recruitment drive may put it in a better position to cope with demand over the long term as well.
Rio Tinto’s surging metal prices
As the broader economic environment worsens, Rio Tinto is continuing to benefit from historically high metal prices.
As a reminder, Rio Tinto is a base metal mining firm operating on a global scale. It currently trades at 5,055p.
In 2021, the firm paid a record total dividend of $10.40 per share. Although dividend policies can be subject to change, it is encouraging to know that I may be able to derive a passive income from investment in this business.
Just this month, the company announced that it had shipped the first iron ore from its Gudai-Darri mine in Australia. With an expected annual production capacity of 43m tonnes, this mine could produce iron ore for use in all manner of industries, including construction.
Investment bank Jefferies also recently increased its target price for the firm from 6,700p to 6,800p, given the company’s solid recent performance.
It warned, however, that demand from China could be low as it remains to some degree in a lockdown situation. As a major customer, China’s reduced demand could hurt Rio Tinto.
Overall, while there are short-term issues affecting both companies, I think easyJet and Rio Tinto could perform well over the long term. I will split my £1,000 equally and buy shares in both firms soon.
