Many investors have opted to own buy-to-let property as a way to generate significant income and enhance their wealth. However, with the government now increasing taxes and making investing in property less appealing, I think maximising your ISA with these stocks is a much better way to grow your net worth.
Creating the right mix
The share price of chemicals company Croda (LSE: CRDA) is up over 100% in the last five years, far better than the returns from property anywhere in the UK. The company does have a high P/E, at near 28, but its past and current performance gives me confidence in its future. Croda is not a value stock and investors should look for slow and steady growth, not fireworks.
Third quarter sales – released in November – rose 2.9% as currency headwinds moderated and the company said it was on track to deliver expectations for the year. Growth was achieved across all its divisions, which continued a trend seen in the half-year results. The results also showed the business has improved in the last three months as sales had previously slipped slightly. In the November results, the company said it is on track to deliver on its expectations for the year. Overall this ability to grow across all divisions should deliver returns for investors if it continues.
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Taking the fight to cancer
Pharmaceuticals giant AstraZeneca (LSE: AZN) is a company whose shares have bucked the recent market slump from which the FTSE 100 hasn’t really recovered. The firm’s share price in the year to date is now up nearly 20% on the back of it rebalancing its portfolio to focus more oncology, which it believes will underpin future sales growth.
In November, AstraZeneca announced that product sales had returned to growth in the third quarter as new cancer drugs began to make a noticeable impact on the top line. Product sales increased 8% in the quarter to $5.27bn, to lift revenue in the year to date to $15.28bn. The rising share price has pushed down the yield from around 5% to nearer 3.5% and the P/E has also risen to around 18, but if the pipeline of drugs AstraZeneca has can produce blockbusters, I expect that to put a rocket under the share price making it look much less expensive.
Acquiring growth
Halma (LSE: HLMA) is another outperforming FTSE 100 stock. Over five years, the safety, health and environmental technology company’s share price has leapt by 139% and with the interim dividend being raised by 7%, management seems confident. Like Croda, this isn’t a value stock as it has a P/E of 30 and a yield only around 1%. Instead, it’s a stock for those looking for sustainable growth.
Its first-half results released in November showed adjusted pre-tax profit rose 19% to £112.9m on revenue of £585.5m, up 16% from the same period a year ago, and earnings per share increased by 22%. The company makes a lot of bolt-on acquisitions and has continued to acquire businesses this year. In the first half, it completed three acquisitions, although it’s a good sign to see in the results that it is not reliant on acquisitions for growth, as it also showed organic constant currency profit growth of 16%. The history of bolt-on acquisitions coupled with organic growth should enable Halma bodes well for the future to help it provide returns for investors for years to come.
