My top FTSE 100 buys for the £20k Stocks and Shares ISA allowance

In uncertain stock markets, Manika Premsingh thinks these FTSE 100 stocks would make the best investments for her Stocks and Shares ISA allowance.

Manika Premsingh ❯

@macro_think

Manika Premsingh is an economist, financial writer and investor, with a focus on converting macro trends into actionable investment ideas. She has worked in the UK and India with clients across financial services, consulting firms, public sector and non-profits. She has shared her views at multiple international forums and has been widely quoted for them in leading media. Manika is a Masters in Economics and was also a recipient of the Goldman Sachs 10,000 Women scholarship for Certification in Entrepreneurship for her research startup, Orbis Economics. She is on twitter @macro_think

Published 14 December, 2021 11:54 am GMT

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Stock markets are uncertain again and the FTSE 100 index closed lower by 1.1% yesterday. On its own, a single day’s decline is not necessarily a big deal, but it does reflect ongoing nervousness among investors.

How I’m investing via my Stocks and Shares ISA now

So when I think of my Stocks and Shares ISA investments for the remainder of the year, or even the next tax year, I have one idea in mind. My focus will now be on dependable, long-term FTSE 100 investments. I have already invested in stocks that are either cyclical in nature or are recovery plays. These stocks should be capable of giving me great returns during good times, but they are equally likely to falter during bad times. And since we are still in an uncertain period, I would now like to shift my attention towards stocks that have a history of long-term returns.

As such, I have zoomed in on two FTSE 100 stocks that I believe could be good to hold in the long term. And they could also balance out the ongoing fluctuations in my current investment portfolio. Since they have given good returns over time, I reckon that the Stocks and Shares ISA is a good wrapper for them, because it gives me tax relief on capital gains.

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2 FTSE 100 stocks I like

The first of my picks is the industrial equipment rental company Ashtead. A lot of its business comes from construction, which is a cyclical sector. In fact, the latest numbers on the UK economy show that the construction industry actually shrank in October from the month before.

But I still like the stock. This is because majority of its business is derived from the US, which has a huge infrastructure plan in place. A boom in the industry could keep demand for industrial equipment rental strong. Also, its long-term share price chart is encouraging. Over the past decade, it has been more on the rise than not. It has been growing and has given investors some rich returns. Its latest results are also encouraging and suggest that the future looks bright.

I also like speciality chemicals manufacturer Croda International. It works with a variety of sectors ranging from personal care to industrial chemicals and life sciences. This makes it somewhat slowdown-proof, I feel. And its results show that as well. It has been doing quite well, and there is no indicator I can see that says the future will be different.

The downside

It is quite pricey though, with a price-to-earnings (P/E) ratio of 58 times, far more than Ashtead (which is at 28 times). Also, it goes without saying, that the future could look very different from the past. This is especially so, if the virus situation gets worse, Ashtead in particular might take a hit. But even Croda International might not come out completely unscathed by, say, another round of lockdowns.

My takeaway

I would not give into these fears though. In fact I might just invest the entire £20k allowance for the next tax year in my Stocks and Shares ISA in these two stocks.