As an investor, you usually get classified according on your risk appetite. If you do not like taking risk and prefer to play it safe with conservative investing ideas, then this article is probably not best suited for you. On the other hand, if you are more adventurous in terms of what you like to invest in and are happy to take on additional risk for the potential of higher rewards, then read on!
The stocks I’ll be discussing can all be added to your Stocks and Shares ISA, meaning that the gains made from them would be tax-free. Given their potential to generate large returns, this tax wrapper will be very useful should you have high capital gains when you decide to exit the investment.
Building for the long term
The first firm I am keen on is Marshalls (LSE: MSHL). The FTSE 250 firm is a supplier of materials for the construction sector, ranging from stone and concrete to more developed water management systems.
Performance over the past year has been strong, gaining some 67% over the past 12 months. This has been down to a combination of factors, although the immediate one is good financial performance.
In the latest trading update last month, the company expects group revenues to be up 10% to £542m from the previous year, despite poor weather and Brexit uncertainty in the sector. This outperformance despite some hamstringing leads me to conclude that this is a stock waiting to move significantly higher this this year.
In the trading update, Marshalls noted that the outcome of the general election had created “a more certain political environment” that will benefit the business. Should we see Johnson agree a trade deal this year, then we could see a strong bounce back in the construction sector.
Looking for a spark
From a rallying stock that could go further, I’ll turn to a falling stock that could recover. That describes Marks & Spencer (LSE: MKS), the embattled FTSE 250 firm that has had several disappointments over the past couple of years. Store closures and a poor Christmas trading period saw downward revisions on trading updates for the firm.
My colleague Andy Ross summarized M&S’s latest trading update here.
Looking forward, I think Marks & Spencer could be a turnaround buy for aggressive investors due to the shift in personnel at the top. Last week saw the announcement of Eion Tonge as the new CFO, set to come in to try and turn the finances around. In addition Katie Bickerstaffe was recently appointed as chief strategy and transformation director, and the incumbent Melanie Smith will head up the new partnership with Ocado (one initiative I am excited about).
These types of changes at the top have worked for various firms in the past to give new direction and new life to struggling companies, so this could be the spark we have been waiting for to jolt the share price back higher.
