The new Stocks and Shares ISA allowance: 2 shares I’ll add for growth

Andy Ross picks out two UK growth shares he’s likely to add to his Stocks and Shares ISA as part of the £20,000 allowance.

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I like investing in a Stocks and Shares ISA because it’s tax efficient. This new tax year once again allows me to invest £20,000 into one ISA. I aim to make use of as much of the allowance as I can afford to help me build my wealth by investing in shares.

A share I’ll add to my Stocks and Shares ISA

Calnex Solutions (LSE: CLX) specialises in testing and measurement services for telecommunication (5G) networks. Given that we have just had the auction for the 5G spectrum in the UK, the timing for this share couldn’t be better.

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A trading update in February showed that the future looks bright. The company was able to say that its revenue for FY21 would be ahead of market expectations. Lower costs (particularly less travel and events) also mean margins will improve as well. A combination of higher revenues and better margins is, I think, very good for a growth share and bodes well.

With a market capitalisation of only around £100m, there’s plenty of potential for the shares of this AIM-listed group to move up.

The main risks with this share are twofold. One is that as it reports in US dollars, a weaker dollar could hurt profitability. The other is its valuation. The P/E is around 29.

On balance though I think Calnex Solutions is a share that might be added to my Stocks and Shares ISA.

All that being said, there is another similar and larger company, Spirent. Its share price has been weaker, which could be seen as a pro or a con, depending on my timeframe. For long-term investors, its lower P/E at 22, and falling share price, may make it more attractive than Calnex. Ultimately, they are well positioned for growth, and I will be researching both. 

Another growth share I like the look of

Belvoir (LSE: BLV) is a property franchise group, providing branding and support to property sales and lettings franchisees. It has done remarkably well through Covid-19, which is perhaps surprising.

Back in December, it was able to announce that trading in the 10 months ended 31 October had been ahead of its pre-Covid-19 expectations. Tenants seem to have, by and large, been paying rent through the pandemic.  

Before Covid-19, Belvoir was doing very well. Revenues had risen from £6.95m in 2015 to £19.25m in 2019. Profits had also risen impressively. I feel growth can continue into the future, based on its resilient performance through the pandemic and its expansion into property financial services in recent years. The valuation seems reasonable at a price-to-earnings ratio of around 15. 

There’s a risk that franchisees could become unhappy with the brand, as has happened at Domino’s Pizza. That would affect sales, as would tenants struggling to pay rent if the economy takes another downturn.

Also, as a franchisor, Belvoir’s brand is very important. That means any negative actions on the part of franchisees could impact the overall value of the franchise.

I aim to make sure I make the most of my Stocks and Shares ISA this month and beyond and I think Calnex Solutions and Belvoir Group could help me get the growth to build my wealth through investing.

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Andy Ross owns no share mentioned. The Motley Fool UK has recommended Dominos Pizza. 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.

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.

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