With only a few weeks to go before the end of the current tax year (5 April), I’m on the hunt for great-but-temporarily-unloved FTSE shares to invest in with my use-it-or-lose-it £20,000 ISA deposit limit.
Here are three that catch my eye.
Great stock, great price
Price comparison site Moneysupermarket.com (LSE: MONY) already occupies a slot in my Stocks and Shares ISA but I’m strongly considering increasing my stake.
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Supported by “exceptional trading” at its Insurance division, the company delivered record revenue of £432m in 2023. Pre-tax profit also rose 4% to £72.3m.
What’s remarkable is that this happened despite an exceptionally uncompetitive energy market. The downside is that this is predicted to continue in 2024.
Still, I’m happy to snag the chunky 5.2% dividend yield in the meantime. And should I wish to buy more, I doubt I’d be overpaying. A forecast price-to-earnings (P/E) ratio of 14 is significantly lower than its five-year average of 19 times earnings.
For a company that boasts superior margins and returns on the money it invests compared to the market average, that looks a steal.
Out of fashion… for now
Another stock I’m mulling buying soon is luxury fashion brand Burberry (LSE: BRBY). That’s despite the company’s value dropping by 44% in the last 12 months as consumers have tightened their belts, particularly in key markets like China.
Given that we’ve had two profit warnings from the company in only a matter of months, I’m certainly not discounting the possibility of a third in the not-too-distant future. It’s an old stock market adage that these tend to come in threes.
But is the luxury goods sector — and Burberry in particular — doomed? Based on our all-too-human desire to show status, I just can’t see it. And we know that the best time to buy stocks tends to be when they’re hated rather than when they’re loved. In retrospect, the worst time to buy was when the shares hit a record high in April 2023.
Since it’s impossible to time the markets (at least consistently), I think it might pay to at least begin building a position here and take advantage of the 4% yield on offer.
Ready to recover
A final FTSE stock that I’ve been considering is investment platform provider AJ Bell (LSE: AJB).
Thanks in part to the cost-of-living crisis and the reluctance/inability of people to save in tough times, this is a company that has been out of favour for a while. However, I believe the tide could now be turning thanks to the prospect of interest rate cuts. Back in January, AJ Bell revealed net inflows of £1.3bn in Q1 – up 63% year on year.
If this is the start of the next bull market, buying sooner rather than later for my portfolio might be a good idea. The caveat is that those aforementioned cuts may come later than expected.
But I wonder if this fear is already priced in. Right now, the shares trade on a forward P/E of 17. Like Moneysupermarket, this is significantly lower than the five-year average (38). There’s also a lovely 4.6% dividend yield to keep me patient.
