With the caveat that it’s not a certain a British ISA might ever come to fruition, the premise and discussion around one still affords a great opportunity to look at some of our free-site writers’ favourite companies on the UK market right now!
AstraZeneca
What it does: AstraZeneca is a global biopharmaceutical company specialising in oncology, rare diseases, cardiovascular, and other areas.
By Ben McPoland. I’ve viewed AstraZeneca (LSE: AZN) as a perfect starter stock for a few years now. Therefore, I’d happily add it to my SIPP, ISA, UK ISA, or whatever investing account acronym comes along next.
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And the recent Q1 results have only served to strengthen my view. The firm beat expectations on both the top and bottom lines and confirmed a 7% increase to the dividend for 2024.
Its oncology revenue grew 26% to $5.12bn. Meanwhile, its other businesses, including rare diseases, also saw double-digit growth during the quarter.
One issue is that R&D and marketing costs are rising, which is worth keeping an eye on. However, this is aimed at driving future growth, so I’m not too worried.
Another potential risk is the increasing criticism of CEO Pascal Soriot’s pay package. He may decide enough is enough and retire or move to the US, where high pay for success isn’t such an issue. Having overseen a 300%+ share price increase inside 12 years, he would be sorely missed.
Despite nearing an all-time high, the stock still seems reasonably valued at 17.5 times forward earnings.
Ben McPoland owns shares in AstraZeneca.
Burberry
What it does: Burberry is a global luxury goods manufacturer, retailer and wholesaler
By Paul Summers. If the British ISA is eventually introduced, I’d be tempted to devote a portion of my £5,000 allocation to Burberry (LSE: BRBY) stock.
This might seem a strange pick. The firm has had an awful time of late with the cost-of-living crisis hitting sales, particularly in important markets like China. This has caused Burberry’s share price to more than halve in just one year.
Things could conceivably get worse before they get better. But I think these headwinds are temporary. When interest rates are eventually cut and discretionary income increases, I can see the stock recovering strongly. In the meantime, there’s a 4.4% dividend yield to enjoy.
The biggest risk for me is that Burberry, with its rich heritage and iconic check pattern, will be snapped up on the cheap before the luxury goods sector is back in favour.
Paul Summers has no position in Burberry
Coats Group
What it does: Coats is a world leader in thread manufacturing and structural components for apparel and footwear.
By Jon Smith. When looking for a stock to fly the British flag for my ISA, I came across Coats Group (LSE:COA). The share price is up a modest 4.4% over the past year, but I like it as a defensive share for my portfolio.
As a world leading thread manufacturer, I think demand should be constant even if major economies including the UK head into a recession. This could be due to inflation rising again and interest rates staying elevated for longer.
The businesses is supplies goods rely on thread and other sewing supplies as a necessity. This should allow the share price to remain supported even during tricky times. Of course, a risk here is that it could underperform if the UK economy booms, as investors will pile into riskier growth stocks. Yet as a hedge for the rest of the year and beyond, I think it makes sense.
Jon Smith doesn’t own shares in any firm mentioned.
JD Sports Fashion
What it does: JD Sports is a UK high street retailer offering premium athleisure goods and sports equipment.
By Charlie Keough. Plenty of UK-listed shares look like good value for money at the moment, especially JD Sports Fashion (LSE: JD.).
Its shares have suffered over the last 12 months. A profit warning due to weakened consumer spending will tend to do that to a stock. However, at 117.5p a share as I write, I think JD stock has plenty of growing room.
The firm’s growth in the last decade has been incredibly impressive and it’s showing no signs of stopping anytime soon.
It opened 215 new stores during the 53 weeks to 3 February 2024. More widely, JD has laid out its intentions to invest between £500m to £600m annually from 2023 to 2028, with the bulk of this going on expanding its physical presence in the US and Europe.
Today, I can pick up its shares trading on around 11 times forward earnings. I think that’s a steal.
The threat is that as the cost-of-living crisis goes on JD will continue to operate in a tough trading environment.
But focusing on the underlying business, I believe the long-term prospects for JD look positive.
Charlie Keough does not own shares in JD Sports Fashion.
Rightmove
What it does: Rightmove operates a property portal that allows users to search for properties to buy or rent.
By Edward Sheldon, CFA. Rightmove (LSE: RMV) ticks pretty much every box from a ‘quality investing’ perspective.
For starters, it has a very strong brand. Thanks to the power of this brand, it has a huge share of the UK property search market.
Secondly, it’s very profitable. Over the last five years, return on capital employed (ROCE) has averaged an astonishing 285% (making it one of the most profitable companies in the FTSE 100).
Third, it has a great growth track record. This year, revenue is forecast to rise about 8%.
Finally, it has a strong balance sheet and a rising dividend.
Now, there is some uncertainty due to US online property search company CoStar’s recent move into the UK market (it bought OnTheMarket). This is likely to increase the level of competition.
However, I reckon Rightmove will continue to prosper. And at its current valuation (a P/E ratio in the low 20s), I think the stock looks attractive.
Edward Sheldon owns shares in Rightmove
