The coronavirus pandemic has created unprecedented circumstances for people and businesses worldwide. To stem the tide of infection and sickness, governments implemented varying economic closures. Suddenly, people were forced to work, learn, and entertain themselves at home.
Thankfully, several effective vaccines against COVID-19 were developed, and over 10.6 billion doses have been administered. That's giving governments the confidence to start reopening their economies. As the reopening trend gains momentum, my top two stocks to buy will benefit.
International coffee chain Starbucks (SBUX -2.17%) was devastated at the pandemic's onset. The company relies on people visiting its coffee shops in person to enjoy its hot or cold beverages. It's no surprise then that overall revenue decreased by 11.3% in 2020.
Management made quick and wise decisions at the start that allowed the coffeehouse to emerge more robust in 2021 with revenue growth of 23.6% and overall sales of $29 billion, topping $26.5 billion in 2019.
One of those decisions was to close roughly 400 Starbucks locations in dense urban locations. The move is proving to have been wise, as remote working looks like a pandemic consequence that will stick around for the long term. Not coincidentally, the shuttered locations were those that relied on in-person customers; during the pandemic, folks preferred to get their coffee on the go.
Still, the company has more than 34,000 locations worldwide that will benefit from fewer restrictions. The sales to people on the go will be supplemented by sales to those who like to sit and enjoy their beverage of choice inside a Starbucks.
Fortunately for long-term investors, Starbucks is trading at a price-to-earnings ratio of 25, near to its lowest in the past three years. The market is focused on the effects of rising inflation on Starbucks profits in the near term, giving those with a longer-term perspective an opportunity to scoop up shares at a discount.
The Walt Disney Company
The House of Mouse was another company that suffered dramatically at the onset of the pandemic. The Walt Disney Company (DIS 0.21%) relies on bringing together large groups for entertainment. Several of its lucrative operations had to be closed for months.
As at Starbucks, Disney's management took the opportunity to enhance the business. For instance, it developed mobile ordering at its theme parks and contactless check-in at its hotels and resorts. The moves have lessened the need for staff, which is paying high dividends during a time of widespread labor shortages.
What's more, Disney increased prices at its theme parks for tickets, parking, concessions, and merchandise. That move, too, is paying off; Disney CFO Christine McCarthy said that guest spending in Q1 (ended Jan. 1) at Disney's theme parks was up 40% compared to the same quarter in 2019. That's despite pandemic restrictions.
Already the segment is on pace to surpass revenue and operating income from 2019. As economic reopening gains momentum, Disney's theme parks could deliver even better results.
Disney is trading at a forward-price-to-earnings ratio of 34, which is near its lowest in the last three years. Disney's revenue in 2021 of $67.4 billion was still behind the $69.6 billion of 2019, so it arguably has more room to benefit from economic reopening than Starbucks. Regardless, both Disney and Starbucks are excellent stocks to buy to take advantage of continued economic reopening.