There are a couple of indicators in the Nials family household that Spring has sprung:
Firstly, I become physically unable to ever want any pancake-related item of foodstuff anywhere near my person for at least another year.
Secondly, my inbox becomes clogged with emails from numerous financial institutions reminding me that it’s ISA season again. Large in number they may be, but they raise a good point. Stocks-and-shares ISAs should be a key part of any long-term investor’s armoury — they do provide tax-free returns after all!
One of the challenges with leaving it to (or as there’s still the best part of a month left – close to) the last minute before the 5 April deadline, is figuring out quickly what shares to buy into. So, in order to help, let’s have a look at one stock that I think would be a stellar contender for a portion of your £11,520 allocation: SABMiller (LSE: SAB) (NASDAQOTH: SBMRY.US).
To start with, you cannot argue that SABMiller is a FTSE 100 stalwart. It has operations in 75 countries across the world, and sells over 20 billion litres of lager per year. It has a market cap of around £47bn, making it the second biggest brewer in the world after Anheuser Busch InBev, with household name brands such as Fosters, Miller, Grolsch and Peroni under its wing.
So, what about its financials? Well, SABMiller currently trades on a P/E of 13.29, so perhaps could be considered relatively well priced at this moment in time. With regards to dividends, its yield is currently just under 2.4%, so well below the 3.5% FTSE 100 average. However, over the past couple of years its dividends per share has been on the increase, posting totals of $81 in 2011, $91 in 2012 and $101 in 2013.
The main reason, however, as to why I would consider SABMiller a great selection for your ISA is because of its growth potential. In its last half-year results (released in November last year), it posted a 5% rise in group profits. Its basic EPS was up a solid 8%, too.
And that’s just in the short term. SABMillers’s long-term growth has been solid as well. In fact, the share price is up over 318% since March 2009. So, to apply a pound value to that, if you invested your entire £11,520 allocation in SABMiller shares and saw similar growth, they would be worth over £36,600 in just five years’ time.
And when you remind yourself that that’s nearly £37k of tax-free profit, you’ll hopefully understand why this beverage giant is firmly in my thoughts.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
> Chris does not own shares in SABMiller.