Forget buy-to-let! Here’s 3 FTSE 100 shares I’d buy for a Stocks and Shares ISA

Andy Ross thinks these three FTSE 100 shares combine fantastic value and growth qualities that could greatly reward shareholders.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

.I’m looking in this article at three FTSE 100 shares that combine fantastic value and growth qualities. These could well be great buys for a Stocks and Shares ISA.

A very cheap global miner

Rio Tinto (LSE: RIO) is one of the world’s leading mining companies. It’s worth over £45bn, even after the recent market declines. Investing in a miner wouldn’t be everyone’s cup of tea. The sector is also highly cyclical so if shares fall further it could be hit harder than most in the short term.

But there are reasons to add it to a Stocks and Shares ISA. These reasons include a price-to-earnings ration below eight on a trailing basis. For now, the company is still scheduled to pay dividends.

The group has been reducing debt, which has put it in a better position than it was last time commodity prices fell.

China a major consumer of iron ore, which is Rio’s main product. As China is seemingly recovering from coronavirus, demand might not dry up to quite the extent which might have been expected just a few weeks ago.

Dividends suspended

Barclays (LSE: BARC) shares are offering a fantastic combination of value and growth potential. But first it has to come through this current crisis which has forced it to scrap its dividend, along with other banks.

Given the banks have been building up capital in recent years it’s doubtful this will be a problem, provided COVID-19 doesn’t shut down the economy completely.

Assuming the economy bounces back this year, the shares at a P/E below five are incredibly cheap. It’s hard to remember a time Barclays had a P/E anywhere near this low. Indeed, the shares at 10-year lows. That’s despite Barclays performing well financially before the virus hit. In 2019 it made £4.4bn of pre-tax profit.

Its diversification, as both a retail and investment bank, should also help see it through these rocky times where interest rates have been slashed and debt is rising. I think it’s a good one for the ISA.

The value trust that’s gone defensive

The manager of investment trust Scottish Investment Trust (LSE: SCIN) has reacted quickly to the changes brought about by coronavirus. Last month he sold a number of consumer stocks, retailers, banks and oil services companies – including Gap, Macy’s, M&S, and banks ING and BNP Paribas.

The trust owns a number of overseas stocks. In the top 10 holdings from the UK are defensive, lowly valued shares such as Tesco, BT, and United Utilities.

The trust has £100m of borrowings it will use to scoop up other shares it wants to own.

It remains to be seen whether the strategy of shifting the portfolio to meet the challenge posed by COVID-19 will work well for the trust’s investors. But it’s trading at a discount to its true value. It also has a great record of paying out dividends to shareholders. With dividends being cut left, right, and centre, it’s a share I’d want to pop in an ISA.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andy Ross owns shares in Scottish Investment Trust. The Motley Fool UK has recommended Barclays. 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.

More on Investing Articles

Investing Articles

£20k of savings? Here’s how an investor could target £980 of passive income each month

With a £20k pot to deploy, our writer outlines how a long-term investor could target almost £1k a month in…

Read more »

Investing Articles

FTSE shares: a bargain way to start building wealth in 2025?

Christopher Ruane explains how, by buying FTSE 100 shares at what he thinks are bargain prices, he hopes to build…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

3 ISA mistakes to avoid in 2025

Our writer outlines a trio of mistakes investors can make in their ISA, to their cost, and explains why he’s…

Read more »

Older couple walking in park
Investing Articles

3 UK shares to consider as a long-term investment for retirement

Our writer identifies three UK shares with long-term growth potential he believes investors should think about holding until retirement and…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

Could this beaten-down FTSE 250 stock be on the cusp of a recovery in 2025?

After this FTSE 250 financial services stock lost another 24% of its value in 2024, Andrew Mackie sees the potential…

Read more »

The Milky Way at night, over Porthgwarra beach in Cornwall
Investing Articles

Warren Buffett says make passive income while sleeping! Here’s my plan to do so

Billionaire Warren Buffett has said many wise things over the past half a century, including a thing or two about…

Read more »

Investing Articles

£5,000 invested in this FTSE 250 company 5 years ago is now worth over £24,000

Stephen Wright looks at how a FTSE 250 food stock has more than quadrupled over the last five years –…

Read more »

Investing Articles

I asked ChatGPT to name the best FTSE 100 stock and it picked this engineering giant

Dr James Fox asked generative artificial intelligence to name the best stock to invest in on the FTSE 100 in…

Read more »