These UK shares are stinking out my ISA. Time to sell?

Paul Summers has been reviewing some of the worst-performing UK shares in his portfolio. Has the time finally come to cut the cord and sell?

| 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 Asian woman with head in hands at her desk

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.

Not every UK share I buy for my ISA is going to work out. And during my investing career, I’ve certainly had my fair share of stinkers.

Today, I’m reviewing the three biggest detractors in my current portfolio. Do I still believe in them?

Pack your bags

The performance of online holiday firm On the Beach (LSE: OTB) has been disappointing. There was me thinking that the end of the pandemic might see an explosion in ‘revenge spending’ as people emerge from their homes.

To some extent, this is what happened. But then came high inflation and a cost-of-living crisis. These succeeded in pushing the shares down and leaving my position underwater.

To be fair, On the Beach is trading well. The company recently reported half-year revenue of £80.8m. That’s an 11% increase year on year. It also forecast a record summer thanks to a bursting order book.

Surely this makes the stock– at less than 10 times forecast earnings — an absolute steal? It seems the market is unconvinced.

Since the next update (due September) covers that vitally important summer season, I’m staying put. I’m also crossing my fingers that there aren’t any more geopolitical wobbles or inflation spikes in the interim. These could do a lot of damage.

On the Beach is definitely ‘on the naughty step’.

Great company, bad investment?

Another loser has been Vimto owner Nichols (LSE: NICL). Again, a lot of this seems to be down to inflationary pressures.

This is particularly frustrating as this bears all the hallmarks of a ‘quality’ company.

First, it sells low ticket soft drinks that people buy out of habit. This makes earnings fairly predictable.

Second, its got solid fundamentals. It consistently makes great margins on what it sells and, outside of a pandemic, stellar returns on the money it puts to work.

There’s also virtually no debt on its books. Put another way, Nichols should easily survive another period of economic upheaval.

The problem is that these things look priced in (17 times forward earnings). I’m also not seeing anything that will put a rocket under sales in the near future.

I always intend to hold stocks for the long term but Nichol’s time could be up.

Blue sky bet

A third stinker is AIM-listed penny stock Seeing Machines (LSE: SEE). It runs high-tech tracking software that monitors drivers’ levels of fatigue. The goal is to reduce accidents on the roads.

Sounds good, right?

Sadly, it’s been anything but a smooth ride for investors so far. This is despite fairly frequent news on partnerships with major manufacturers.

Now, this was always going to be a risky buy. Growth stocks like this often need regular injections of cash to keep the lights on, regardless of how good its products are.

At least my holding is modest. As always, maintaining a diversified portfolio can help to minimise some of the financial pain that comes with less successful stock picks.

Perhaps the first cut to interest rates may finally spark life in more volatile, small-cap UK shares. Or perhaps confirmation that the company is now at breakeven (expected in 2025) will get things motoring.

I’m loath to cut my position. But a deadline has been set.

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.

Paul Summers owns shares in Nichols Plc, On The Beach Group Plc and Seeing Machines Limited. The Motley Fool UK has recommended Nichols Plc and On The Beach Group Plc. 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

2 cheap shares I’ll consider buying for my ISA in 2025

Harvey Jones will be on the hunt for cheap shares for his ISA in 2025 and these two unsung FTSE…

Read more »

Investing Articles

I am backing the Glencore share price — at a 3-year low — to bounce back in 2025

The Glencore share price has been falling for some time, but Andrew Mackie argues demand for metals will reverse that…

Read more »

Road trip. Father and son travelling together by car
Investing Articles

A 10% dividend yield? There could be significant potential here to earn a second income

Mark Hartley delves into the finances and performance of one of the top-earning dividend stocks in his second income portfolio.

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Charlie Munger recommended shares in this growth company back in 2022. Here’s what’s happened since

One of Charlie Munger’s key insights is that a high P/E ratio shouldn’t put investors off buying shares if the…

Read more »

Investing Articles

What might 2025 have in store for the Aviva share price? Let’s ask the experts

After a rocky five years, the Aviva share price has inched up in 2024. And City forecasters reckon we could…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Trading around an 11-year high, is Tesco’s share price still significantly undervalued?

Although Tesco’s share price has risen a lot in the past few years, it could still have significant value left…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£11,000 in savings? Investors could consider targeting £5,979 a year of passive income with this FTSE 250 high-yield gem!

This FTSE 250 firm currently delivers a yield of more than double the index’s average, which could generate very sizeable…

Read more »

Young Caucasian woman with pink her studying from her laptop screen
Investing Articles

Does a 9.7% yield and a P/E under 10 make the Legal & General share price a no-brainer?

With a very high dividend yield and a falling P/E forecast, could the Legal & General share price really be…

Read more »