£1,000 to invest? I’d buy this FTSE 100 thrashing growth hero inside an ISA

Harvey Jones says these two FTSE 100 (INDEXFTSE:UKX) growth stocks merit their place in a well-rounded ISA portfolio.

| 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.

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.

If you’re looking to top up your Stocks and Shares ISA, there are plenty of FTSE 100 companies offering high yields at a bargain price. Tread carefully, though, because many may have seen their share price fall due to poor performance.

That’s not a problem with these two stock picks, both of which have posted barnstorming share price growth over the last five years. Especially my first pick.

Melrose Industries

Melrose Industries (LSE: MRO) is one of those unglamorous blue-chips that private investors can easily overlook, to their cost. It has grown into a company worth £10.83bn by purchasing underperforming manufacturing businesses, then working hard to turn things round. It’s probably best know for its recent takeover of GKN.

Melrose aims to revive its acquisitions and sell them at a profit, then return the proceeds to shareholders. It only floated on AIM in 2003, but since then has posted an average shareholder return of 25% a year, and created £4.8bn of shareholder value.

The share price is up an astonishing 352% over the last five years, against a rise of around 14% across the FTSE 100 as a whole. Despite this, it trades at a relatively modest 16.7 times forward earnings, roughly similar to the valuation for the index as a whole.

This is a growth stock rather than an income play, although it does yield 2.2% a year, covered 2.7 times. You also have to brace yourself for lumpy profits, which can bounce around depending on the timing of acquisition and sales.

That makes it very difficult to look at one set of company results and gauge the underlying trend. However, Melrose now has 16 years of storming success under its belt, which is an impressive track record for any company.


Exhibitions, events and business publishing group Informa (LSE: INF) can’t match that level of share price growth, but it’s nonetheless up 77% over five years, way ahead of the index. It has nudged higher today after reporting continued growth in revenue, adjusted profit, earnings and cashflow, with full-year group revenue on track to hit 3.5%.

Underlying revenues grew 2.8% in the 10 months to 31 October, and that’s ahead of its key November-December trading period, which is seasonally stronger. Informa has been enlarged by its recent tie-up with UBM, and is now a £10bn company with a global reach in the knowledge and information economy, including professional, commercial and academic.

Recent growth came despite two “impacts”, in Dubai and also Hong Kong, where civil protests have slightly dented revenues. Informa also issued a new €500m bond to strengthen its balance sheet and lower the overall cost of debt and extending average maturity to 5.5 years. Its debt recently doubled to £2.68bn, roughly a quarter of its market-cap, but is not a major concern.

Informa currently trades at 15.9 times forecast earnings, which means it’s fractionally cheaper than the FTSE 100 as a whole, despite its dramatically superior share price performance. The forecast yield is 2.9%, covered 2.2 times, so this one is also primarily a growth play.

Things look solid if not spectacular on that front, with earnings expected to climb 3% this year and 5% next. A solid company for challenging times.

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 no position in any of the shares mentioned. 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

How many National Grid shares must I buy for a £100 monthly second income?

I think National Grid could be one of the safest options for investors seeking a dividend income. And today its…

Read more »

Blue NIO sports car in Oslo showroom
Investing Articles

NIO stock is down 90%. Will it recover?

NIO stock has fallen significantly from its 2021 all-time high. But could now be a chance for this Fool to…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

These 2 UK shares could help me reach £1,000,000 in my Stocks and Shares ISA

A FTSE 100 compounding machine and a FTSE 250 value stock are the UK shares Stephen Wright thinks could help…

Read more »

Middle-aged Caucasian woman deep in thought while looking out of the window
Investing Articles

If I’d invested £1,000 in Lloyds shares at the start of the year, here’s what I’d have now

The stock market is unmoved, but Stephen Wright thinks last year’s record profits might give Lloyds shares a long-term boost.

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

I’ll snap up shares in this growth stock in March if others don’t get there first

This Fool says shares in this growth stock are stable, full of profit, and might be undervalued. But there are…

Read more »

Rainbow foil balloon of the number two on pink background
Investing Articles

My 2 top energy investment trust picks for a passive income

I'm aiming to buy more of these investment trusts for a passive income and the reasonably stable energy sector returns…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

5.5% dividend yield! Shares like these could be great for my retirement

Oliver Rodzianko thinks this company with a stellar dividend yield could be very useful when looking for income from his…

Read more »

Investing Articles

Should I buy this FTSE 250 stock as it soars back to the FTSE 100?

This FTSE 250 stock has rallied following its pandemic woes. This Fool thinks now could be a good time to…

Read more »