As we’re now close to the middle of May, we’re passing some milestones worthy of note. For one, the ISA deadline is now behind us. This means investors have a fresh allowance of £20,000 to invest tax free in the 2020 ISA.
We’re also now almost two months past the possible bottom of the FTSE 100 crash. Given the bounce back is still in its infancy, there are some good FTSE 100 growth and income stocks to be considered.
Combining the two factors above, let’s take a look at some of these stocks that could warrant a place in your ISA. Any of these could be put into a 2020 Stocks and Shares ISA, to be kept for the long term.
A long-term ISA stock?
The first stock I want to focus on is Pearson (LSE: PSON). It is a large publisher with an educational tilt that has branched more into digital offerings in recent years.
The digital learning side could be a large winner for the firm during the lockdown period and beyond. In a recent trading update, the finances showed a 5% drop in revenue during the first quarter. For me, this is actually a fairly good outcome. Other firms have seen revenues fall to almost nothing in the same period.
The relatively small drop is explained as due to an uptick in demand for online courses and online study materials. Those who are unable to go to university, or even primary or secondary school, are able to do some study online.
I feel this future-proofs 2020 revenue for Pearson, which could see strong share price uplift despite the impact of the lockdown on the broader economy.
A final point of note is that the firm has confirmed its dividend will be paid this year, amounting to around £100m. For income investors, this will be welcome news, given the many dividend cuts from other large firms.
Mining for profits
The share price for Glencore (LSE: GLEN) is at levels not seen since 2016. The first quarter of this year has proved tough for the global commodity firm. Having to close mines around the world on a temporary basis due to the virus has impacted revenues on that side of operations. The volatile oil price has also made it hard for Glencore to maximize efficiency.
I think for a growth stock the firm is an attractive buy right now. The impact of mine closures is temporary, and is not a fundamental, long-term cause of concern. The cuts in capital expenditure and upcoming dividend payout should help cash flow in the short term. The dividend cut is a saving of $2.6bn alone. In turn, this should increase longer-term profitability (key for long-term growth investors).
With a price-to-earnings ratio around eight, the stock looks undervalued compared to the FTSE 100 average of around 13. This does look to be a nice setup for value investors, although the recent dividend cut makes it one to avoid for those solely looking for short-term income.
Glencore and Pearson offer different angles for investors. Irrespective of whether income or growth is your priority, both stocks could be inclusions into your 2020 ISA.
