2 stocks to kickstart a Stocks & Shares ISA

The annual deadline for the Stocks and Shares ISA is 5 April. This means if I want to take advantage of my contribution limit, I’ve got to do it soon.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young black man looking at phone while on the London Overground

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Stocks and Shares ISA is a powerful vehicle for our investments. It shields our earnings from capital gains and dividends from tax. In fact, over 95% of my non-pension investments are in an ISA. Essentially, I only invest outside the ISA when my allowance has run out.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

So what if I were starting a Stocks and Shares ISA today? Well, if possible, I’d want to build a diverse portfolio of stocks.

Although it’s worth considering how much our brokerages charge before build a portfolio. For example, given Hargreaves Lansdown‘s fee, I don’t tend to invest less than £1,000 in a single stock.

However, if I were investing through a cheaper platform, that would be less of a concern. In turn, this could make it easier to have diverse portfolio of holdings.

So here are two stocks I’d consider buying as part of a broad ISA portfolio.

GigaCloud Technology

GigaCloud Technology (NASDAQ:GCT) wouldn’t be the first stock on most people’s lists but I just can’t ignore the value here. The company essentially connects furniture manufacturers in China with markets in North America and Europe, and then provides the logistics solutions.

It’s a unique business that responds to the challenge of storing unsold large parcel goods in the country of sale — just think about how big a warehouse must be to hold 500 sofas. So GigaCloud connects the makers with buyers.

Investors might be concerned then about the impact of shipping disruption around the world, but GigaCloud recently said it’s having only a limited impact. That’s because its main markets are in North America.

On a valuation perspective, GigaCloud is trading at 11.1 times earnings for the year ahead, 9.5 times earnings for 2025, and 6.9 times for 2026. That’s incredibly cheap for a company on such an exciting growth trajectory.

Li Auto

Li Auto (NASDAQ:LI) is another Chinese company on my list. The stock fell last week after the company downgraded its own production figures for Q1, citing lower-than-expected order intake and operational issues with its star model Li Auto Mega.

This is a very different narrative to the one we’ve been getting over the last year during which Li blew all of its competitors away. In the fourth quarter alone, deliveries reached 131,805, reflecting a substantial 184.6% year-over-year surge.

But despite this dip in Q1, I have faith that the firm will come back stronger. It’s developed a great niche by focusing on EREV (Extended Range Electric Vehicles), and has just entered the BEV (Battery Electric Vehicle) market with an all-singing-all-dancing seven-seater.

It’s currently trading around 17 times forward earnings — that’s taking into account lower sales in Q1 — and has a price-to-earnings-to-growth ratio around 0.8. In the current market, it’s very cheap, and I’m excited to see what happens when it starts tapping overseas markets.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Fox has positions in GigaCloud Technology Inc. and Li Auto Inc.. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Surely, the Rolls-Royce share price can’t go any higher in 2025?

The Rolls-Royce share price was the best performer on the FTSE 100 in 2023 and so far in 2024. Dr…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

Here’s how an investor could start buying shares with £100 in January

Our writer explains some of the things he thinks investors on a limited budget should consider before they start buying…

Read more »

Investing Articles

Forget FTSE 100 airlines! I think shares in this company offer better value to consider

Stephen Wright thinks value investors looking for shares to buy should include aircraft leasing company Aercap. But is now the…

Read more »

Investing Articles

Are Rolls-Royce shares undervalued heading into 2025?

As the new year approaches, Rolls-Royce shares are the top holding of a US fund recommended by Warren Buffett. But…

Read more »

Investing Articles

£20k in a high-interest savings account? It could be earning more passive income in stocks

Millions of us want a passive income, but a high-interest savings account might not be the best way to do…

Read more »

Investing Articles

3 tried and tested ways to earn passive income in 2025

Our writer examines the latest market trends and economic forecasts to uncover three great ways to earn passive income in…

Read more »

Investing Articles

Here’s what £10k invested in the FTSE 100 at the start of 2024 would be worth today

Last week's dip gives the wrong impression of the FTSE 100, which has had a pretty solid year once dividends…

Read more »

Investing Articles

UK REITs: a once-in-a-decade passive income opportunity?

As dividend yields hit 10-year highs, Stephen Wright thinks real estate investment trusts could be a great place to consider…

Read more »