Forget the recession. Look at what I’ve been buying for my Stocks and Shares ISA!

The economic outlook couldn’t be more bleak, but this Fool doesn’t think this should stop long-term investors from buying. Here’s what I’ve been adding to my ISA in May.

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

Should news the UK faces a sharp recession mean investors should avoid buying anything for their Stocks and Shares ISAs? Not in my opinion. 

Today, I’m going to cover three purchases I’ve recently made and why. In spite of the likely economic gloom ahead of us, I think all could prove great additions, over time.

ISA having some of that!

The first stock has been on my watchlist forever. Irn-Bru owner AG Barr (LSE: BAG). To be sure, Barr won’t escape the economic impact of the coronavirus lockdown. With pubs, bars and cafes closed, it’s been dependent on supermarket sales to keep going. 

This, however, should prove a short-term blip. The company is sound and has a great portfolio of brands, including Funkin cocktail mixers and Rubicon to support sales of its legendary orange beverage. Returns on capital employed are reassuringly decent and the firm’s balance sheet also looks solid. 

Barr’s stock rarely goes on sale. Having more than halved in value over the last year, however, it’s changing hands for less than its average valuation over the last five years (18 vs 21 times forecast earnings).

No investment is without risk, and current predictions could still prove optimistic. Nevertheless, I suspect the margin of safety is such that now is the time to at least start adding it to my ISA. 

Down but not out

While AG Barr is a new holding, I’ve also been adding to my existing stake in high street baker and FTSE 250 member Greggs (LSE: GRG).

Some may think this a strange choice, particularly if a second coronavirus wave puts an end to the lifting of lockdown restrictions. There’s also a possibility revenue and profits don’t recover as swiftly as first thought, due to the prolongation of social distancing.

But let’s get real. Greggs surely has a better chance of coming out of the coronavirus storm than most on the high street. A firm selling low-ticket baked treats is unlikely to be impacted as much as those selling discretionary items. A new TV or phone purchase can be postponed. I’m not convinced people will apply the same rationale to a steak bake. Now factor in Greggs’ strong brand, history of savvy marketing, and excellent free cash flow.

This is why I expect to continue holding this company in my ISA for many years to come.  

Gaming for growth

A final ISA purchase I’ve made is actually a fund. Notwithstanding this, I do think it could generate returns to rival the stocks mentioned above. 

The VanEck Vectors Video Gaming and eSports UCITS ETF tracks the performance of 25 companies. All derive a large proportion of their revenue from this hot sector. As I’m sure you know, gaming has been immensely popular over the lockdown period.

Although small, the fund is arguably a safer option than buying a single developer. The latter’s fortunes can be highly dependent on only a few titles at any one time. With this ETF, an investor can mitigate that hit-and-miss risk.

At the end of April, the VanEck fund had returned 27.5% since its inception last June. It is, of course, unlikely to deliver this consistently. Nevertheless, the industry’s strong growth prospects make me sufficiently bullish to add it to my ISA. The fund has a total expense ratio of 0.55%.

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.

Paul Summers owns shares of AG Barr, Greggs and VanEck Vectors Video Gaming and eSports UCITS ETF. The Motley Fool UK has recommended AG Barr. 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

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Investing £5,000 in a Nasdaq 100 index fund 5 years ago would be worth this much now

Zaven Boyrazian looks at the Nasdaq 100 index’s performance since December 2019. Has investing in an index fund been good?

Read more »

Electric cars charging at a charging station
Investing Articles

Why the Tesla share price rocketed 38% in November

Our writer considers the reasons for the recent red-hot Tesla share price performance. Is now a good time for him…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
US Stock

Why NIO stock fell 13% in November

Jon Smith flags up a couple of key factors that he believes contributed to the fall in NIO stock over…

Read more »

Investing Articles

Which of these UK stocks is the better bargain in December?

Stephen Wright thinks Diageo and Senior are very different UK stocks with very similar prospects. But which one offers better…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

Mistakes to avoid when investing in the FTSE 100!

The FTSE 100 offers great near-term valuations and dividend yields, but Dr James Fox believes investors should be wary when…

Read more »

Investing Articles

Here’s why the Scottish Mortgage share price jumped 9.2% in November

The Scottish Mortgage share price has been outperforming indexes over recent weeks. Ben McPoland digs into some reasons why.

Read more »

Investing For Beginners

Why the IAG share price rocketed 24% in November

Jon Smith explains why the IAG share price did so well last month, citing three factors at work that helped…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

I think Tesla stock’s overpriced. So why not short it?

Our author thinks Tesla stock has got ahead of itself since the US election. So why not put his money…

Read more »