The Stocks and Shares ISA deadline is rapidly approaching. Investors have until 5 April to deposit £20,000 in one of these tax-efficient wrappers, but this is a ‘use it or lose it’ allowance. It does not roll over into the next tax year. Next year, the allowance resets at £20,000.
The good news is once investors have deposited this money into a Stocks and Shares ISA wrapper, they can take their time to invest it. However, I am not waiting around to invest my money. I think there are plenty of opportunities in the FTSE 100 right now that I want to take advantage of.
And with that in mind, here is a selection of FTSE 100 stocks I would buy with an investment of £20,000 today.
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FTSE 100 recovery play
The first company on my list is the Premier Inn owner Whitbread (LSE: WTB). The business has struggled due to coronavirus lockdowns over the past couple of years. Still, it is now well-positioned to capitalise on the economic recovery and reopening of the economy across Europe.
It is already reporting a solid recovery for its properties across the portfolio. Consumers are travelling again in the UK, and its European business is also reporting an increase in growth. Further, management has plans to gradually increase the portfolio’s size over the next couple of years, which should only increase the company’s growth potential.
A challenge that may hit these expansion plans in the near term is the cost of living crisis. Some consumers could put off travel plans with costs rising across the board. Rising wages may also put pressure on the company’s profit margins.
Market leader
In a different sector, I would also buy the engineering group Smith & Nephew (LSE: SN). This company owns a diverse portfolio of highly specialised products. The great thing about the business is that these specialist products have few replacements. That means the corporation has a strong competitive advantage over its peers.
Other companies around the world are currently ramping up spending to meet rising demand after the pandemic, and Smith & Nephew is set to benefit from this expansion.
It is one of the few businesses in the FTSE 100 that has a global presence in niche engineering markets, which makes it a must-buy for my £20,000 portfolio, in my opinion.
Unfortunately, it is not immune from the challenges I have outlined above. Some risks higher-than-expected costs and a reduction in demand due to rising prices.
FTSE 100 homebuilder
I think one of the most attractive sectors on the market right now is the UK home building sector. The UK housing market is structurally undersupplied and demand for properties is increasing rapidly. It does not look as if this trend is going to continue anytime soon.
Builders are trying to increase output, but there is only so much they can do. At the end of the day, planning controls and resource shortages will restrict the amount of properties companies can produce. With that being the case, I would acquire Taylor Wimpey (LSE: TW) for my £20,000 FTSE 100 portfolio.
According to the firm’s full-year results for the year ended 31 December 2021, the corporation increased the number of homes produced by 47%, translating into a 19.3% increase in operating profit.
Management also reinvested profits back into growth, with the business acquiring 14,000 new building plots in a year. It now has a total of 85,000 building plots in its land bank and in the process of development.
This land bank should underpin the company’s growth for the next four or five years. And the group has also shown a strong willingness to return lots of cash to investors when profits rise. This growth potential and the stock’s cash return plans are the reasons why I would buy the stock for my portfolio today.
Challenges the company may face as we advance include rising costs, which could put pressure on profit margins. Additional regulations may also hit margins if the enterprise has to spend more to comply with government demands.
Renewable profits
One of my favourite stocks in the FTSE 100 is utility supplier SSE (LSE: SSE). This company is one of my favourite stocks because it is investing a considerable amount in renewable energy production. This is likely to be a strong growth driver for the enterprise in the years ahead.
The demand for renewable energy is booming, and SSE is one of the largest investors in the UK, with several of the largest wind projects in the country under its belt.
Going forward, I think the business can capitalise on the renewable energy market opportunity by increasing production and using its skills to connect more homes across the UK. This could translate into earnings growth and, more importantly, dividend growth for investors in the years ahead.
That said, this is a highly regulated market. Regulators place strict controls on the amount of profit utility companies are allowed to generate. This could restrict the group’s growth in the years ahead if regulators decide to clamp down on the sector.
E-commerce market
Warehouse operator Segro is the final stock I would buy for my FTSE 100 portfolio of shares. As the e-commerce market expands, the demand for big warehouse space is increasing. This is one of the few businesses that specialise in developing and selling this warehouse space.
Demand for services has exploded over the past couple of years, and the trend looks like it will continue.
However, a lot of money is flooding into the market, which could depress returns from these assets. That is probably the most considerable risk this company faces today.
