I own many different stocks in my Stocks and Shares ISA. However, I don’t view them all equally. Some are ‘core holdings’ while others are more speculative bets.
Here, I’m going to highlight three stocks that I view as core. These stocks are the foundation of my portfolio, and I plan to build my ISA around them.
Apple
Let’s start with Apple (NASDAQ: AAPL). This is one of my largest holdings.
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There’s a lot to like about Apple from an investment perspective, to my mind. For starters, it has one of the most powerful brands in the world. This is a competitive advantage as it keeps consumers (myself included) coming back for more.
Secondly, it has created an amazing ecosystem (where all its products connect to each other) over the last few decades. This is another strong competitive advantage.
Third, it continues to innovate and move into higher-growth industries. I expect to see Apple make big moves in the payments and healthcare industries in the years ahead.
Finally, the company is returning cash to shareholders via dividends and buybacks.
Of course, Apple has its risks. For example, sales growth could slow if competitors release superior products.
Overall though, I see a lot of appeal in the stock. I think it’s the perfect core holding.
Microsoft
Next up is technology powerhouse Microsoft (NASDAQ: MSFT).
Microsoft has dominant positions in a number of growth industries, including business productivity solutions, cloud computing, video gaming, and artificial intelligence (AI). So I see a lot of growth potential in the long run.
It also has a fantastic leader in CEO Satya Nadella. Since Nadella became boss in 2014, he has made some brilliant moves, including focusing on cloud computing and shifting to a subscription-based business.
Additionally, it has defensive attributes. Given that so many businesses globally rely on its products, we are unlikely to see revenues suddenly fall off a cliff.
Now Microsoft does have a higher valuation. This adds some risk. However, given its quality attributes, I’m comfortable with the valuation.
Alphabet
Finally, I’m also building my Stocks and Shares ISA around Alphabet (NASDAQ: GOOG). It’s the parent company of Google and YouTube.
I like Alphabet for a number of reasons. One is that it is the leader in internet search with a 90% market share. This puts it in a powerful position from a digital advertising perspective.
Another is that it looks set to be a major player in the AI space in the years ahead. Over the last decade, Alphabet has made a large number of AI acquisitions.
The big risk here is competition from Microsoft. Recently, it has been introducing powerful new AI-related features into its own search engine, Bing. This could potentially lead to lower market share for Google.
I’m backing Alphabet to reinvent itself however. I think it has the technology and the innovation to remain a leader in the search/digital advertising space in the years ahead.
