Over the last decade, the average annual return from a Stocks and Shares ISA has been 9.64%. That’s a terrific result for investors, but achieving it isn’t entirely straightforward.
An ISA brings protection from taxes on dividends and capital gains, but it’s not a magic ticket to investment returns. Identifying which stocks to buy is still key to getting a supercharged result.
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.
Apple
Top of my list of stocks to buy (and one I already hold) to supercharge an ISA is Apple (NASDAQ:AAPL). I think the iPhone manufacturer stands to be a key beneficiary of the rise of artificial intelligence (AI).
The company stands to benefit in two ways. First, I’m expecting AI developments to boost iPhone sales as the latest releases enjoy strong consumer demand.
Second, Apple’s dominant position in the smartphone market puts it in a powerful position. The likes of Microsoft and Alphabet have to go through its ecosystem to reach the most customers.
The biggest risks for investors are twofold. The first antitrust – I don’t see a competitor disrupting the business, but there’s a real chance of the authorities breaking up its walled garden.
The second is China. Apple’s presence in the country is significant both in terms of manufacturing and customers and tensions with the US have already started creating issues for the company.
Despite the risks, both the stock and the business have been terrific performers over the last five years. And I expect this to continue, which is why I’m looking to add to my investment.
Porvair
With a market-cap of £311m, UK manufacturer Porvair (LSE:PRV) is at the other end of the scale in terms of size. But it’s another stock I might buy for my ISA.
The stock’s been up and down lately, but the underlying business has been growing steadily. And I think there could be more to come from the company.
Porvair’s filtration products have important features that generate repeat business. Its aerospace filters are specified in the design of airframes and its lab equipment’s disposed of after each use.
This makes the business difficult to compete with and puts it in a strong position to generate revenue growth over the long term. That’s why I’m looking to buy the stock.
The end markets the company sells into can be cyclical. Aerospace demand fell sharply during the pandemic and lab equipment has been working through excess inventories since then.
That brings a risk of short-term volatility in sales and profits. But, over time, I think the company stands to do well, which is why I see it as a stock that could supercharge returns from an ISA.
Growth stocks
Both Apple and Porvair are growth stocks. I’m expecting both to use the profits they generate at the moment to increase their earnings per share significantly in future.
In addition, the underlying businesses have dominant market positions that are difficult to disrupt. That’s why I think both could be great long-term investments for my Stocks and Shares ISA.
