I tend to find that most investors who make use of a Stocks and Shares ISA do so for long-term goals. Those that prefer to trade or hold stocks for a short period of time usually don’t execute this strategy from the ISA. Due to the benefits of not having to pay capital gains tax when selling a stock in the ISA, long-term growth ideas make sense. Here are three that I’ve think investors should be considering at the moment.
Large historical share price gains
First up is Frasers Group (LSE:FRAS). The business owns the likes of Jack Wills and House of Fraser. The process of buying brands to fuel growth has worked well in the past. This speaks to why the share price has soared by 233% over the past three years, with it up 13% in the past year.
I think this growth stock still has legs to move higher in coming years. One important factor influencing this is the high gross profit margin (42% in the latest half-year report). This means that it’s able to convert a large amount of incoming revenue into gross profit.
Naturally, the high street is seeing lower demand as people’s spending habits change. This is a risk, but the online presence of many brands within the group should cushion this impact.
Growth potential going forward
The second idea is BAE Systems (LSE:BA). When thinking about an area in the market that should offer solid returns in the long term, defence is definitely on the list. Sadly, the unstable nature of the world means budgets for defence are increasing.
BAE Systems is well placed to benefit from this, given the end-to-end capabilities it possesses for developing, manufacturing and selling military related systems and products. Over the past three years, the stock has risen by 86%. It’s up 33% in just the past year.
Granted, business does rely on securing large contracts. Losing out on just a few Government contracts could provide a hit to future earnings.
Tapping into the UK population
Finally, St. James’s Place (LSE:STJ) is a stock that I feel could perform strongly going forward. The wealth manager managed to post record results for 2022. This included having pre-tax profit break above £500m, much higher than the £353.8m from 2021.
Looking forward, the UK has an aging population. This should support more people thinking about financial planning and investment for retirement. Furthermore, high inflation and high interest rates force people to think about money more. This should attract more clients in the coming year as many think about how to make cash work harder.
The company does need to be watchful for competition. Wealth management has been flagged up as a key area of focus for several high-street banks.
All three ideas are on my watchlist, and I feel investors who are focusing on long-term ISA growth will benefit from reviewing them as well!
