2021 stock market rally! I’d buy booming FTSE 100 shares like this one in an Isa today

I think FTSE 100 shares could really start motoring once the vaccination programme rolls out, and I’d consider this e-commerce play today.

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FTSE 100 shares have made a solid start to 2021, although investors remain anxious as the pandemic intensifies. That could change next month, as the vaccination programme rolls out and lockdowns are eased. The UK’s prospects may start to look very different, then.

If we steal a march on Europe and the US, global investors will notice and could pile into FTSE 100 shares. This could power the index to 7,000 and beyond. Now looks like a good time to load up on equities using my Stocks and Shares ISA allowance, to generate tax-free returns. Here’s one I’m looking very closely at today. It is expensive, but that’s because its share price has been flying in recent months, and is up again today.

While pure bricks-and-mortar fashion retailers have struggled, online operation ASOS (LSE: ASC) has been streaking ahead. This morning’s trading statement reported that pre-tax profit for 2021 “surpassed our expectations, driven by investment in product, pricing and marketing and stronger than anticipated consumer demand for our products”.

I’d buy FTSE 100 shares like this one

The group’s multi-brand model captured demand as consumers increasingly shopped online in the four months to 31 December. Even clothing return rates fell, although this was partly due to tougher social restrictions in the period. Pre-tax profit is expected to hit at least £40m in the first half, which helped drive the ASOS share price up almost 5% this morning.

ASOS has bounced back strongly after issuing a series of profit warnings in recent years. It expanded overseas too quickly, faced tough competition, and suffered operational issues at distribution centres in Germany and the US. Those issues are largely in the past.

Unlike many FTSE 100 shares, ASOS has enjoyed a short-term boost from the pandemic. UK sales were boosted by restrictions on non-essential retail stores through the peak Christmas period. It also reported “good growth” in the EU, Australia, and Middle East and North Africa (MENA) region, and “increased momentum” in the US.

Fast fashion just got expensive

This performance is particularly impressive given that lockdowns have kept people inside rather than out flashing their new purchases at parties. It could do even better when we start partying again. However, it will also face more competition as people hit the high street again (if only for the sheer novelty of it). Despite that, e-commerce is here to stay and ASOS is reaping the benefit.

The stock is up 50% in six months but it does look expensive, trading at just over 40 times earnings. That makes it more expensive than most FTSE 100 shares. However, a 23% jump in sales in the run up to Christmas justifies that. ASOS also boasts an active customer base of 24.5m, up another 1.1m over the period. Given the group’s global reach, that has plenty of room for expansion. ASOS is an expensive buy, but still a buy to me.

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.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS. 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.

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