Tom Chen, Author at The Twelfth Magpie

The Synairgen share price: here’s why I’d buy and hold this stock

Tom Chen — Tue, 23 Feb 2021 13:34:24 +0000

The Synairgen (LSE: SNG) share price delivered a great return on investment last year. The shares started the year at 6.34p each and ended it at 153p. The spike in price was caused by the firm’s development of a Covid-19 treatment called SNG001 and its early success. It received positive results from its phase 2 study that started in March 2020.

So far this year, Synairgen shares are up 3.7% and the 12-month return is around 838%. That said, at early Tuesday afternoon’s price of just under 157p, the stock is well below its record level of 246p from August 2020. But maybe that’s an opportunity for me. I see Synairgen as a long-term ‘buy’ as it seems Covid is here to stay, despite vaccine success.

Synairgen’s Covid-19 treatment

Synairgen was founded in 2003 by three professors who had a vision of creating a respiratory drug discovery-and-development company. But with a market capitalisation of just around £315m, it’s still a fairly small business. It has only three proprietary drug programs in its pipeline, with the most eye-catching being SNG001, its treatment for Covid-19 patients.

The company clearly differs from giant pharmaceutical companies such as Pfizer, Moderna, and AstraZeneca. They’ve focused on developing a Covid-19 vaccine, by targeting coronavirus patients instead. Synairgen has recently commenced a phase 3 trial, which is being tested in approximately 20 countries and includes 610 Covid-19 patients.

Vaccines aren’t 100% effective and not everyone will take them. So, I firmly believe that the treatment, if approved, could potentially reduce the risk of this pandemic in the long term.

Synairgen share price outlook

That would be good news. But obviously, it’s a challenge to predict what the future holds for the company right now. The world is in wait-and-see mode, and the lasting impact of the coronavirus pandemic is not yet apparent in the global economy. But here’s why I think the business is a good buy right now — and it isn’t just because the Synairgen share price is far from its all-time high. Right now, there’s no effective treatment for Covid-19 patients. The world really needs a treatment for the disease as vaccines probably won’t eliminate it on their own.

When I look ahead, this is a key reason why I believe Synairgen is a good stock to hold for the long term. Of course, even though the price has fallen recently, the spike in the Synairgen share price over the last year makes this stock risky. And the share price is likely to drop if the company fails to achieve its targets.

But overall, I’m optimistic about the outlook. And even though Synairgen is seen as a ‘Covid-19 stock’, it’s not a one-trick pony. Its BioBank platform technology, for instance, is quite impressive. It should help Synairgen discover and develop novel therapies for respiratory diseases in general. Additionally, its pipeline portfolio includes inhaled interferon for asthma patients and a treatment for COPD.

As such, I’m going to add the stock to my portfolio today, especially following the drop in the Synairgen share price in the past week.

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Tom Chen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Passive income stocks: should I buy Tesco shares right now?

Tom Chen — Mon, 08 Feb 2021 15:27:49 +0000

Up until now, Tesco (LSE: TSCO) was hanging pretty well since the pandemic started in February last year. Tesco shares have already gained nearly 4% since the beginning of the year. They are currently trading around their pre-Covid-19 levels. At this price, I think many investors and hedge funds would consider Tesco an attractive investment for 2021 and beyond.

More importantly, a recent special dividend announcement and a share consolidation plan are cause for growing interest in Tesco shares. I don’t think it’s clear yet how investors will respond to this announcement in the short term. But as a long-term value investor, I think this is a great opportunity to buy Tesco shares.

Tesco announces £5 special dividend, share consolidation

Last week, Tesco announced a special £4.99bn dividend following the sale of its Asian arm last year. The company is distributing all of the £7.8bn it generated from the sale of its operations in Thailand and Malaysia. It is adding the remainder to its pension program.

On Friday, 12 February 2021, the company will hold a virtual general meeting to announce that shareholders will receive 15 new shares for every 19 shares that they own. Tesco’s 50.93p dividend payout is worth around a fifth of the current share price, and could potentially cause a big drop in price. There’s also a risk that existing investors that might face potential tax bills from Tesco’s special dividend payout.

To prevent that, Tesco expects to complete the share consolidation to maintain share prices at comparable levels. Essentially, Tesco shares will trade at the same price following the share consolidation as they did before. However, the number of total shares will be reduced.

Tesco dividend

In the current circumstances, Tesco pays out a dividend of 6.5p per share or nearly 4% interest annually. While this does not put Tesco among the high-yield paying dividend stocks in the UK share market, the largest British retailer is still, in my view, one of the safest options out there in terms of predictability and distribution of dividends.

The bottom line

Overall, I see more reasons to be optimistic right now about Tesco’s future. The £5bn special dividend announcement has prompted Tesco’s share price rise. On top of that, Tesco has reported record Christmas sales, when it experienced a boost of £1bn in extra sales during the holidays.

Looking at the numbers, I reckon Tesco remains a solid passive income stock. It operates in a defensive industry and its market share is not likely to be shaken in the near future. Yes, there are lots of challenges ahead for Tesco. The biggest challenge of all is Brexit disruptions. This has already caused a major problem for Tesco in delivering food supplies to Northern Ireland.

At the same time, Tesco is still the second-largest grocery business in Ireland and the biggest player in Northern Ireland. And, in 2020, Tesco had the largest market share in the UK with 27%. So overall, with an attractive dividend payment history and an annual yield of nearly 4%, I think that unless the market crashes in 2021, Tesco’s share price could rise further over the coming months.

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The cleantech trend – I’d buy Greencoat UK Wind

Tom Chen — Tue, 26 Jan 2021 15:58:49 +0000

At present, the UK is already a world leader in producing clean renewable energy. Furthermore, the British government has a target to become 100% green within the next three decades. Just in late 2020, Boris Johnson announced a 10-point green plan with 250,000 new jobs that aims to make a green industrial revolution. Then, the PM also announced the government’s plan to power all UK homes with renewable energy by 2030.

But the cleantech trend is not only local. The election of President Joe Biden in the US is likely to spark renewed private-sector interest in the cleantech sector. I think it is widely anticipated that the global demand for clean energy will rise in 2021 and beyond. And, in my view, Greencoat UK Wind (LSE: UKW) is one of the best long-term cleantech stocks in the UK market to buy right now.

What is Greencoat UK Wind?

Greencoat UK Wind is an investment company specializing in long-term acquisitions of operating wind farms in the UK and globally. It has offices in London and Dublin and manages approximately £5.5bn in renewable energy assets for its clients. As of early 2021, Greencoat is invested in 35 wind farms.

With a nearly £2.5bn market cap, the FTSE 250 constituent is one of the leading funds solely focused on clean technology. Finally, Greencoat also pays an attractive annual dividend of 5.2%, which makes it, in my view, one of the most interesting dividend stocks in the UK market along with these two high-yield dividend stocks.

Greencoat UK Wind share price performance

Greencoat UK Wind’s share price has traded in a very narrow range since the company went public in 2013. As it is among the less volatile stocks in the market, I think it could be a good addition to my portfolio, especially with the high dividend payout ratio it offers.

Looking at more fundamentals, the company has a price-t0-earnings ratio of above 40. This is well above the average of FTSE 250 companies. I think its P/E ratio indicates the high expectations investors currently have for Greencoat and the green tech industry.

At the same time, the Greencoat share price is currently trading at a premium of around 14% of its net asset value (NAV). And, although it is a good sign in terms of the company’s future outlook, there’s a risk here that Greencoat is a bit overvalued right now.

What’s next?

The UK has a clear target to reach zero emissions by 2050. This is good news for Greencoat. It will require the British government to build and subsidize new renewable power plants in the upcoming years. And, I firmly believe the Biden presidency could be a turning point in the US government policy towards cleantech energy. But what I really like about Greencoat is its plans to expand to the US and its constant acquisitions of new renewable energy plants. Just a few days ago Greencoat announced its first investment in the US – the acquisition of a 24% stake in an 861m portfolio of four onshore wind farms located in coastal South Texas.

Looking forward, I don’t see a strong reason in the near future for Greencoat’s share price to fall drastically.

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The Shell share price is on the rise. Should I buy?

Tom Chen — Tue, 12 Jan 2021 09:18:24 +0000

Back in October 2020, the Royal Dutch Shell (LSE: RDSB) share price was trading at its lowest level in more than two decades. The Anglo-Dutch FTSE 100 company was hit hard last year by the Covid-19 pandemic that slashed demand for oil and gas products. But with the market recovery in the second half of 2020, Shell’s share price has been on a steady increase, rising over 60% from low levels of 900p in late October to around 1,450p at the time of writing.

With that in mind, I think Shell shares could be a great buy-and-hold investment opportunity for 2021. So, let’s take a closer look at some of the reasons why I’m bullish on this stock.

Demand for oil is expected to remain high

At present, the price of Brent crude oil is still way below 2020’s opening price of $67 per barrel. But this year, Brent crude posted its biggest weekly gain of the past five months amid Saudi Arabia’s plan to cut output and investor optimism over the rollout of Covid-19 vaccines globally.

Even if oil prices don’t make a strong recovery in 2021, demand for oil and gas products is expected to remain high. And, while the IEA has slightly reduced 2021’s oil demand forecast, it still predicts a significant increase of 5.7 million barrels per day in the upcoming year. Moreover, if the vaccine rollout goes well and the aviation industry stages a comeback, the oil sector could get the biggest boost in the market. So, overall I think oil and gas demand projections are in favor of Shell’s share price in 2021.

Clean energy

Aside from the positive projections for oil-related companies, there’s another reason for optimism here. Broadly speaking, 2020 was a year of a shift to cleaner and renewable energy. Despite the pandemic, many renewables energy companies have seen a big rise in profitability over the past year. And Shell is moving in this direction.

It isn’t there yet though — in late 2020 it has announced its failure to meet its green energy targets. And I’m not sure Shell will become an entirely renewable energy company in the near future. However, I like the fact that Shell is building a lower-carbon power business and is embracing the need for clean and renewable energy. At present, it’s well ahead of its major oil competitors in terms of renewable energy projects and deals. With the ever-rising demand for clean energy, this might be a crucial factor in Shell’s share price in the next few years.

Shell share price — the bottom line

All in all, I like the idea of buying a stock like Shell that recently crashed to 25-year lows. Last year was tough for it, and as a result, it slashed its dividend for the first time since the Second World War. But I’m a fan of the Warren Buffett philosophy that says to buy stocks in companies that exhibit strong fundamentals and trade at a fairly low valuation. In my view, this is the case now with oil companies like Petrofac and Shell.

With a dividend yield of nearly 4% and a good projection for the next year, I think it still trades at an attractive discount right now and it’s on my watchlist.

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2 high-yield dividend stocks I’d buy for 2021

Tom Chen — Wed, 30 Dec 2020 13:06:56 +0000

The coronavirus pandemic has caused many companies around the world to abandon their dividend payouts, and rightly so. Normally, during times of economic uncertainty, most companies eliminate dividend payments to ensure financial stability and reduce volatility. As such, it’s not easy to find high-yield stocks with low risk right now. This issue is particularly painful for investors when interest rates around the world are at historic low levels.

But, if you’re willing to take a calculated risk with higher-yield stocks, then I think there are good opportunities in the market right now. With that in mind, here’s a look at two high-yield dividend stocks (that are also a bit risky) I’d consider buying for 2021.

Evraz: one of the high-yield dividend stocks I’d buy

The first stock I’d consider buying for next year is Evraz (LSE: EVR), the miner that’s also a major steel producer. Frankly, investing in Evraz isn’t suitable for many investors. It’s using a lot of debt to finance its operations, so it carries a relatively high level of risk. But at the same time, Evraz is offering an annual dividend yield of around 9%, which is well above the FTSE 350 average yield of slightly more than 2%. This makes Evraz one of the highest-yielding stocks in the UK at the time of writing.

But there’s more than that. The share price of the company, of which Roman Abramovich is the biggest shareholder, has made an impressive recovery from the low levels it was trading at in March. In fact, it’s among the few companies that will end 2020 with a positive year-to-date return of around 17%.

Looking ahead to 2021, as Covid-19 vaccines are rolled out, it’s very likely that demand for steel and mining commodities will be on the rise next year. The World Steel Association predicts that global demand for steel will increase by 4.1% in 2021. With that yield of around 9% and the bullish momentum seen in the last months, I think Evraz could be one of the best high-yield dividend stocks to buy with an eye on its additional share price appreciation potential.

High-yield oil stock

Normally, I would be a bit sceptical about a company with an annual dividend yield of above 10%. If any company is willing to pay such a high yield, it’s generally an alarming sign for investors. But here, I actually think Diversified Gas & Oil (LSE: DGOC) appears to be in a good position to continue its positive momentum in 2021.

First, I’m currently pretty bullish on the oil and gas industry. As I ‘ve written before, I reckon oil companies like Petrofac could be heading back to profitability next year. In my view, the same applies to Diversified Gas & Oil.

Second, the company is doing pretty well. In September, it joined the FTSE 250 index as well as the FTSE All-Share Index. Then, in its Q3 trading update, DGOC raised its adjusted EBITDA from $64m in 2019 to $75m in 2020, announced $221 million of available liquidity, and pointed to a notable reduction in its net debt. Consequently, DGOC shares have finished the year with a positive return of above 7%. In my view, this could be an under-the-radar investment for 2021.

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Here’s why I think Petrofac shares could be worth buying in 2021

Tom Chen — Mon, 28 Dec 2020 07:26:41 +0000

2020 has been a terrible year for oil and gas companies worldwide. Petrofac (LSE: PFC) was one of the companies that suffered badly from the Covid-19 pandemic and the ‘oil crisis’ between March and May. Since the beginning of the year, Petrofac shares have lost more than 60% of their value, making them among the worst FTSE 250 performers this year.

However, as the rollout of Covid-19 vaccines in the UK and around the world has brightened the economic outlook, I reckon oil and gas related-companies could be on the rise next year. Yes, Petrofac faces mounting pressure on new orders due to the ongoing pandemic. But the oil and gas facilities services provider has a long history and a robust portfolio of infrastructure energy projects. As such, I think Petrofac shares could be worth buying at current levels.

The oil industry

It’s no wonder that Petrofac’s share price plummeted earlier this year. Oil and gas giants like Royal Dutch Shell and BP have faced major challenges amid the pandemic. According to the World Bank, energy consumption remains well below pre-pandemic levels. And demand for energy products will only fully recover in 2023.

Much like other oil companies, Petrofac was severely affected by the lockdowns around the world. The lockdowns forced it to shut down most of its operations. As a result, it recently warned that profitability will be “materially lower” when it reports its full-year results in February. And it expects final revenues of £4bn for 2020 compared to £5.5bn in 2019.

But Petrofac is not an oil producer. Instead, it builds, designs, and maintains energy infrastructure in several locations across the globe. For a large portion of its revenues, it relies on oil companies. In my view, this is a reason for optimism as the demand for global oil is expected to recover by 5.7 million barrels per day in 2021 (just 3 million barrels below pre-covid levels).

Petrofac share price: what’s ahead in 2021?

Since the pandemic crisis started, Petrofac has taken major steps to reduce costs and expand its future operations. After cutting costs by $125m in May, it announced in December that it plans to cut a further $250m in 2021. As such, it laid off nearly 20% of its staff, reduced salaries, and cancelled its dividend payout.

At the same time, Petrofac has won a series of contracts to ensure operational performance is maximised next year. This includes a $1.65bn contract for an Abu Dhabi megaproject and a two-year contract from NEO Energy. Then there’s a contract for a green hydrogen project, and the largest crude distillation unit operation in Kuwait. Additionally, it has a pipeline of around $46bn of potential contracts for 2021.

All things considered, I think Petrofac’s share price has a positive outlook for the next year. From its current price, I see plenty of reasons why it could at some point be trading again at pre-Covid-19 levels. This would mean an increase of nearly 300%. And if the oil industry recovers next year, it’s very likely that Petrofac shares will attract more attention once the company resumes paying dividends.

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Should I buy Next shares for 2021?

Tom Chen — Mon, 07 Dec 2020 14:01:40 +0000

Next (LSE: NXT) shares have been among a few UK stocks that look likely to end the year close to where they started it, with a year-to-date fall of only around 2.5%. Yet despite this, the stock has actually been extremely volatile since the start of the Covid-19 pandemic. It lost more than 50% of its value in March and early April, but then started to move back towards pre Covid-19 levels.

As such, the stock’s impressive recovery has convinced me to take a closer look at the company and see if it might be a good investment for the next year.

Next share price performance

When the UK went into lockdown in March, Next had to close more than 500 stores and rely on its online business alone. That led to a drop of 33% in sales for the half-year ending in July. Moreover, the company scrapped its dividend payment amid the huge drop in sales, which raised concerns about the financial stability of Next. However, it has embraced the Covid challenge, and quickly made the necessary adjustments in order to adapt to the new normal. Consequently, after April and May, Next’s online sales soared and the share price moved from its yearly low of 3,390p to above 6,770p.

This helped Next raise its full-year pre-tax profits expectations to £365m – an increase of £65m from the company’s initial expectations. In the same Q3 earnings report, it reported an increase of 2.8% from the previous year in full-price sales and a 1.4% increase in total sales, including markdown sales.

What’s next?

Looking ahead, there is some ‘good’ news coming for Next. The collapse of Arcadia and Debenhams, two of the largest UK clothing and fashion retailers, is sad on many levels, but it could help increase Next’s market share. And the company is taking active steps to boost this share too. Earlier this year, it acquired a major stake in Victoria’s Secret’s UK business, which shows that the company has the financial clout to expand in the most difficult economic environment since 2008. Another reason for optimism is the UK’s announcement about starting its Covid-19 vaccine rollout this week. Finally, there’s no doubt in my mind that the stock will get a strong push higher when Next resumes paying dividends, particularly when taking into account that Next has been an attractive dividend stock for the past decade.

Are Next shares a bargain right now?

Overall, I think Next shares are at a critical point right now. The fact that the fashion retailer was in demand during the Covid-19 crisis and that the share price has made a strong rebound make me believe that it could be a top-performing stock in the next year. In the best-case scenario, I reckon it could regain its all-time high of 8,176p (last seen in December 2015) next year. That would be an upside of around 20%. I’d buy.

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I’d buy these FTSE 100 shares for their dividends

Tom Chen — Tue, 01 Dec 2020 15:57:42 +0000

Soon after the coronavirus crisis began, many companies had to scrap their dividends. But over the past months, dividend shares began to resume payouts. In my view, the current situation in the markets makes dividend shares the top strategy for the next year. Let me explain why.

The UK stock market is in a tricky place right now. Analysts and economists are still trying to figure out the disconnect between the stock markets and the economy, which has been one of the most discussed topics in the financial world this year. Although the world economy has suffered its deepest recession and is expected to shrink by 5.2% according to World Bank forecasts, stock markets have actually rallied.

Generally, I would say that the most important reason for the rally is persistently low interest rates, which led to the boost in stock prices. And as long as interest rates remain low, I think dividend shares with high yields are key to building a successful portfolio right now. As such, I’m going to take a look at three FTSE 100 shares that offer a high dividend yield.

Passive income: 3 dividend shares I’d buy right now

Taking the above into consideration, here are three top UK shares with high dividend yield I’d buy right now for a passive income.

Standard Life Aberdeen — The nearly 8% dividend yield currently offered by Standard Life Aberdeen makes this stock the perfect buy and hold option for me right now. This high dividend yield is especially an attractive return in the current low-interest-rate environment.

This year, Standard’s shares dropped by nearly 20%, however, the investment company is starting to show good signs of recovery lately. Since late October, Standard’s shares rose by 25%, and the company’s new CEO Stephen Bird brings new hope for investors. Looking forward, Standard Life Aberdeen has recently announced that it plans to sell its Parmenion platform. In my opinion, this is good news for the company and might push the stock price higher.

Aviva — Shares in Aviva have fallen around 24% since the start of the year. Still, in my opinion, it remains one of the best UK shares to buy right now. A month ago, I suggested that Aviva shares looked like a bargain. Since then, its shares soared from 256p on Oct 29 to 322p on Nov 29, an increase of 25%. Looking forward, I strongly believe that shares of Aviva will continue rising as it offers a high yield of 6.5%.

British Petroleum — The oil and gas company has seen its shares lose around 45% of its value in 2020. This was quite expected given the fact the Covid-19 has paralyzed oil and gas companies. Moreover, the oil crisis in March had a huge impact on oil companies like BP.

Still, British Petroleum pays a quarterly dividend for shareholders, and its annual yield, which stands at 6.01%, makes it one of the best dividend FTSE 100 shares. Overall, I think BP is a great bargain right now for a long-term investment.

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Should I buy Lloyds shares today?

Tom Chen — Mon, 23 Nov 2020 16:54:09 +0000

Lloyds (LSE: LLOY) shares crashed due to the Covid-19 pandemic. However, for some time now it seems like this giant banking firm is poised for a strong rebound. After Lloyds shares have jumped over 30% since the beginning of the month, I’ve been taking a closer look at the bank. In my view, the Covid-19 vaccine might give investors the lift they have been waiting for, and banking firms like Lloyds will use their capital to help investors achieve that goal.

New flow of capital

One of the concerns of the Covid-19 pandemic was that it might completely stop the flow of capital. Normally in times of economic crisis, banks tend to tighten lending for both personal and business loans. More than that, the pandemic has generated a major instability in global capital markets, which deeply affected banking firms. But even when taking the Covid-19 pandemic out of the equation, Lloyds is facing some serious problems. First, the global near-zero interest rate policy of central banks has been a significant problem for banks in the past decade. Then, Brexit is still a huge concern for the UK market, in particular financial institutions. And finally, Lloyds, which is the biggest mortgage lender in the UK, had to deal with a major drop in revenues due to the stand-off in the UK housing market.

So, when taking all the factors above into consideration, the fact that Lloyds shares dropped to all-time low levels in September was not a big surprise. But at the same time, the economy is cyclical and the recession phase is part of that cycle. After all, the idea of investing is buying shares at cheap levels and sell at higher prices.

Lloyds share price boost

Lloyds banking is not a high growth start-up company. It is a strong, well-capitalised banking firm that has survived since 1765. Meaning, it has to maintain its value and strength. This typically happens when the economy is doing well or at least not in a crisis mode. Looking at the factors above, I think the Bank of England is likely to raise interest rates in the next year given the fact that the economic stimulus package might cause inflation. More importantly, Lloyds has returned to profit in Q3, which can be largely attributed to the recovery of the UK housing market. Consequently, Lloyds’ share price spiked from 24p to nearly 37p with strong bullish momentum during the last month.

As for Brexit, it is still a concern…

Lloyds shares — the bottom line

All in all, Lloyds shares currently offer an attractive long-term investment opportunity. The company’s price-to-earnings ratio for the trailing 12 months currently stands at 37, after falling from levels of 70-80 just a month ago. This figure and strong Q3 earnings could be a catalyst for the Lloyds share price to keep rising.

Obviously, there’s still a downside risk, and as such, I wouldn’t invest a large proportion of my portfolio in Lloyds shares. With that in mind, there’s a hype around Lloyds shares at the moment. This gives me the reason to see an upside of around %15–%20 in the next few months. For me, a portfolio allocation of %10–%15 to Lloyds shares is a smart decision right now.

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Covid-19 vaccine: the 3 top stocks I’d buy right now

Tom Chen — Thu, 19 Nov 2020 10:31:33 +0000

The world has been anxiously waiting for a Covid-19 vaccine, so it’s no surprise that sentiment in stock markets turned quite optimistic in recent trading days. Last week, Pfizer announced that its experimental Covid-19 vaccine had proven effective, with more than 90% efficacy in preventing the disease. Moderna has also reported a vaccine that shows nearly 95% protection.

Since then, the FTSE 100 surged nearly 4% on the back of the vaccine news. And expectations that the pandemic will be beaten soon continue to set the tone for a bullish market.

And in my opinion, there might be a good reason for optimism. The stock market’s value is typically based on future expectations rather than past or present performance. The combination of a vaccine, the huge amount of money that was poured into the market during the previous year, and unprecedented near-zero interest rates policies around the world could be strong catalysts for further gains.

With that in mind, here are some companies that I have my eye one as I think they will most likely benefit from the release of a coronavirus vaccine.

Optimistic outlook for GlaxoSmithKline

GlaxoSmithKline (LSE: GSK) has dropped nearly 19% since the beginning of the year amid the coronavirus pandemic and I think that this stock is actually a bargain right now. Why? Well, GSK is a strong candidate in the race to develop an effective coronavirus vaccine. The pharmaceutical giant has recently announced the start of phase 2/3 clinical trials of its Covid-19 vaccine. More importantly, GSK has signed, along with French multinational pharmaceutical company Sanofi, a £2.1bn deal with the US government to supply 100m+ doses. In the UK, it has made a deal with the UK government to supply up to 60m doses too.

Whether its vaccine succeeds or not, I expect a post-pandemic world in which GSK’s shares can rise by around 25% to pre-Covid levels.

Airline industry recovery

It would be a waste of time to discuss the negative impact of Covid-19 on airlines. Clearly, the pandemic has had an enormous impact the likes of International Consolidated Airlines. IAG shares fell to their lowest levels since 2013 in May and again in August. However, since late October, the share price has gained more than 50%, climbing from 91p to around 158p at the time of writing, and the share price outlook remains positive. IAG is a major player in the airline industry with a market cap of more than £7bn and a strong balance sheet.When flights return to normal, I’m convinced that shares of IAG could rise further.

Defensive stock?

Lastly, I think another FTSE 100 stock that can outperform the market in the upcoming year is Whitbread. The company owns Premier Inn. Why has this stock has caught my attention? Whitbread was doing great before the pandemic, particularly following the sale of the Costa coffee chain to Coca-Cola for £3.9bn. But this year, the company’s shares fell sharply amid the lockdowns and the shutdown of the economy. Whitbread’s year-to-date return stands at -37%, largely due to a drop in sales caused by the pandemic. With that in mind, it’s currently trading at a fairly cheap price and if a Covid-19 vaccine comes out soon, I believe it’s one of the best long-term investments in the market right now. I’d buy.

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