Want to make a million from your ISA? I’d avoid this soaring FTSE 100 stock if I were you!

This FTSE 100 share is rocketing in value! Is it a share that could help you to make a million, though? Royston Wild takes a look.

| 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.

Has the stock market crash increased your chances of making a million? There have certainly been plenty of great shares that have plummeted along with the duds during this Covid-19 crisis. It provides an opportunity for eagle-eyed investors to maximise the eventual returns on their invested cash.

More and more people are making millions of pounds from their Stocks and Shares ISAs. It’s partly because rock-bottom interest rates are forcing individuals to seek decent returns on their money through equity markets. It’s also thanks to the acres of information that investors can draw upon to make the best stock investment decisions.

Still, these newly minted millionaires remain in the significant minority. And judging from the quality of some of the dip buying that’s been going on of late, a lot of people aren’t giving themselves the best opportunity to make a million from their own share portfolios.

Happy retired couple on a yacht

A millionaire maker?

I recently explained why De La Rue – a share which has soared 200% this week on fevered investor interest – could leave many nursing a great hole in their pocket. British Land Company (LSE: BLND) is in my opinion another rocketing stock that could turn out to be a mistake for wannabe millionaires.

This particular FTSE 100 share has soared more than 25% in value during the past fortnight as government restrictions on the retail sector have been unwound. As a consequence British Land now trades on a forward price-to-earnings (P/E) ratio just shy of 17 times.

But is the office and retail property owner worthy of such a multiple? It’s a reading that sits above the broader Footsie historical average of below 15 times. And it’s one I don’t think factors in the colossal layers of risk that it currently carries.

Red alert

News that shoppers are being let off the leash again is of course good news. Retailers need to make money in order to pay their rents to British Land. But it doesn’t mean that British Land’s troubles are over, not by a long chalk.

Shops might be reopening, sure. But they still need to adhere to strict social distancing rules that limit the number of customers that’ll pass through their doors each day. This is likely to be no short-term phenomenon, either, as authorities try to curb the chances of a second wave of coronavirus infections.

The Covid-19 pandemic of course also has far-reaching economic consequences that will damage retailers’ revenues. Three former British Chancellors this week tipped UK unemployment to hit levels not seen since the 1980s during a potentially catastrophic downturn. It explains why fellow retail property operator Intu Properties predicted earlier this week that the amount of rents it will likely collect in 2020 will plummet by a shocking £180m year on year.

British Land itself recently announced the collection of just 43% of rents from its retail tenants in the March quarter. It said too that the value of its retail assets had tumbled by more than 26% in the period. This is clearly a company with significant short-to-medium term issues, and a serious long-term problem too as growing e-commerce thins footfall at its malls. I reckon this FTSE 100 share should be avoided at all costs.

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 considered so you should consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Co. 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

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

1 dividend stock with a juicy yield to boost returns!

This Fool likes the look of this dividend stock to boost his passive income stream and explains why he would…

Read more »

Happy male couple looking at a laptop screen together
Investing Articles

Here’s 1 growth stock primed for long-term growth and returns!

Jabran Khan is hunting for a growth stock to boost his holdings. Could this financial advisory business be the right…

Read more »

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

3 FTSE 250 shares I bought for extra dividends

I plundered the FTSE 250 index to find these three cheap stocks with ailing share prices. All three firms pay…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

I’m buying cheap FTSE 100 stocks to boost my passive income!

Buying dividend stocks today could considerably improve the amount of passive income I make. Here are some FTSE 100 stocks…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Am I crazy for buying Royal Mail shares?

Royal Mail shares have collapsed by almost half in 2022. And with group profits falling and strike action under way,…

Read more »

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

2 recession-resistant stocks to buy right now

After the pandemic slump, we're now facing a UK recession. Many are looking for recession-resistant stocks to protect their money.

Read more »

Engineer Project Manager Talks With Scientist working on Computer
Investing Articles

This FTSE 100 stock continues to fall! Should I buy shares?

This Fool takes a closer look at a FTSE 100 quality assurance stock. As the shares continue to fall, is…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

Is the Rolls-Royce share price about to surge?

The Rolls-Royce share price continues to fall as market patience wears thin. But could it be on the brink of…

Read more »