The Stocks and Shares ISA allowance of £20,000 runs through to the beginning of April 2021. So if you still haven’t fully used it, you still have time in December to buy some stocks before the deadline next year. The ISA acts as a wrapper to shelter gains in stock investments from having to pay capital gains tax. Given the recent stock market recovery, there are plenty of FTSE 100 British stocks that I’ve got on my watchlist as potential buys. The recovery has shown some businesses are undervalued, and still others that it might be worth me avoiding!
Property market recovery
In my opinion, British Land (LSE: BLND) could continue to perform well in December and beyond. The share price is up almost 30% over the past three months as property prices have bounced higher. To understand the correlation, it’s key to understand what British Land does. It’s a holding company for lots of properties owned around the UK. This is split between corporate offices, retail and personal housing, and again a mix between generating rental income and underlying property value growth.
British Land hasn’t had the easiest of years, noted only last month with the business having to reduce the value of the portfolio by £1bn (it had been valued at £11.9bn last year). This was blamed on falling rental income as many office workers did their work fully from home and retail also struggled. The value write-down has been offset by the improving property market in general. The latest Nationwide survey reported that annual house price growth stood at 5.8% as of October.
With the stock market recovery, I still think British Land could have further room to run higher. Should the UK agree a deal with the EU over the next few weeks, stocks should continue to rally. The property market could see a further boost from foreign investors piling back into housing. This would likely increase the value of the British Land portfolio.
Returning to growth
The Burberry (LSE:BRBY) half-year report (to the end of September) was nothing to write home about. Operating profit fell 75%, due to the impact of consumer spending from the coronavirus. You could argue that some recent share price rises have been from the broader stock market recovery. But investors must be seeing some value for the share price to be up over 26% in the past month.
The main driver I’m seeing here is that if you go deeper into the details, Burberry is actually turning the corner. Comparable stores sales were down 45% in Q1, then down 6% in Q2, and are expected to post a positive number from Q3. The business also said it’s in a strong liquidity position. The £300m drawdown of funds from bank credit lines at the start of the year has now been fully repaid.
Yes, the half-year report doesn’t look good on the surface (and the full-year report probably won’t either). But I think Burberry could be a buy for December onwards. When you look at the business in more granular detail, I think the worst of the pandemic impact has past.
