With recent turbulence in the stock market, a lot of investors may be sitting on money waiting to decide how to invest it. But right now I continue to see companies trading at prices I find attractive for my portfolio. Here are three shares I’d buy now for my ISA.
FMCG giant: Unilever
Among my list of UK shares for my ISA is blue-chip consumer products maker Unilever.
The company owns a portfolio of popular brands such as Dove, Surf and Marmite. That gives it pricing power, which could help to offset the risk of rising input costs reducing profit margins. With billions of users across the globe, I like the company’s breadth of reach and diversified customer base. I think that can help it continue to generate strong revenues. The Unilever share price performance has been sluggish lately, and has fallen 20% over the past year. But with its 3.9% yield and strong set of brands, Unilever is on my hit list for my ISA.
Shares to buy now: Stagecoach
While talk of a possible takeover by rival National Express boosted the Stagecoach (LSE: SGC) share price last month, lately the shares have given up those gains. But there’s still time for a bid to emerge, which could boost the Stagecoach share price.
In any case I like the underlying Stagecoach investment case. The shares are 90% higher than a year ago. Bus travel is essential for many people who lack any alternative options, meaning demand for the company’s services is set to stay high. Due to lack of competition, there’s little pricing pressure on the company on many routes. It has slimmed down in recent years to focus on its core UK bus and coach operations, which is where I think its operational expertise and business model has been strongest. That should be good for future profitability in my view.
There are risks though. A demand collapse in the pandemic was mitigated by government funding, but any future sudden drop in commuting might not be similarly compensated. That would hurt profits.
9%+ yielding shares: Imperial Brands
After its price drifting southwards in recent days, tobacco company Imperial Brands now offers a dividend yield of 9.2%. I also see potential for future share price appreciation. The share price is already 11% higher than it was a year ago, and the outsized yield suggests room for upside revaluation.
The bear case here suggests that in fact the high yield is a warning signal. With cigarette consumption declining in many markets, Imperial’s cash flows could suffer. That could reduce its ability or willingness to pay dividends. The company did slash its dividend just last year, after all.
Despite that risk, I find the yield compelling and would consider buying more Imperial shares for my ISA now.
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Christopher Ruane owns shares in Imperial Brands and Stagecoach. The Motley Fool UK has recommended Imperial Brands and Unilever. 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.