With the annual Stocks and Shares ISA deadline closing in fast, I have been thinking about companies I would consider buying for my ISA right now. Here are seven that make the cut.
Victrex
If you have never heard of Victrex (LSE:VCT), that may be because it is focussed on business-to-business sales. But you will almost certainly have benefitted from some of its products, which form part of the fabric of everything from spacecraft to cars.
Such mission-critical applications mean that the company’s customers are willing to pay a premium for dependable quality. On top of that, Victrex’s deep expertise and unique processes in manufacturing certain types of polymer products give the company an additional competitive advantage.
Rising energy costs have raised the risk of profits falling at the company. The Victrex share price now stands 11% lower than it did a year ago. I see that as a buying opportunity to add these shares to my ISA and keep them there for the long term.
M&G
The investment manager M&G has had its doubters in the City. That helps explain why the firm has a dividend yield of 8.1%. One doubt was whether clients would move funds elsewhere, leading to lower profits and potentially a dividend cut.
But the company saw a net inflow of funds last year. It also delivered on its policy of maintaining or increasing the annual dividend. Dividends are never guaranteed, but I appreciated management sticking to their word. From an income perspective, the yield is very appealing to me. I hold M&G in my ISA and would consider buying more shares now.
Boohoo
A year ago, when boohoo (LSE: BOO) shares cost well over £3 apiece, the idea that the company would ever be a penny stock might have seemed like a bad joke.
But it has been a rough 12 months for the online retailer. Boohoo’s reputation has continued to suffer following earlier reports of poor labour conditions at some of its suppliers. Additional worries have piled up, such as the potential negative impact of higher material, labour, and delivery costs on profit margins. It issued a couple of profit warnings in the second half of last year.
There are clearly risks here. But I think investors may be paying too little attention to the fact that boohoo has a proven business model. It has delivered consistent revenue growth and profits in recent years. I think the underlying business case remains attractive and the shares now represent a bargain for my ISA. That is why I have stocked up on them this year.
Unilever
Another company that I can buy cheaper now than a year ago is consumer goods giant Unilever (LSE: ULVR). Its share price has fallen 14% in the past 12 months.
Like at boohoo, cost inflation is a risk to profitability at Unilever. But the company’s portfolio of premium brands gives it pricing power. That can help it pass such cost increases onto customers.
I think Unilever needs to fight to stay relevant amid changing consumer tastes. It is doing that partly by emphasising its environmental credentials. When I ask myself whether people will still be buying its brands such as Cif, Domestos, and Surf a decade from now, I reckon they will. So I have tucked Unilever into my ISA. The share price fall means the company now offers me a 4.2% yield.
Safestore
Late last year, among a list of top British stocks for 2022, I chose Safestore (LSE: SAFE). Disappointingly, it has lost 6% so far in 2022. That could reflect some profit-taking, though, as over the past year the Safestore share price has boomed by 68%.
I think the fundamentals of this business remain highly attractive. Demand for self-storage in the UK remains a fraction of what it is in the US. But some of the same growth drivers apply on both sides of the pond. Increased housing costs and flexible commercial rental trends mean that offsite storage is set to keep growing. With its well-established brand and large network of sites, I reckon Safestore could benefit from this. I do see a risk that low barriers to entry could hurt profitability across the industry as a whole. But for now business is brisk and the company raised its dividend 35% this year.
British American Tobacco
Another income choice for my ISA may be predictable, but it is no less appealing to me for that. British American Tobacco raised its dividend yet once more this year, as it has done annually across more than two decades. The shares now yield 6.7%. The first share buyback in a number of years was an additional sign of management confidence in the company’s prospects.
Those prospects remain challenged by the decline in cigarette purchase in many markets. Even the pricing power of the company’s premium brands such as Lucky Strikes can only do so much to help compensate for that when it comes to profits. But British American is seeing strong sales growth in its non-cigarette lines.
S4 Capital
I would consider adding more S4 Capital (LSE: SFOR) shares to my ISA right now, not least because the company is due to unveil its annual results this Thursday. Expectations are high given the fast growth seen so far at Sir Martin Sorrell’s digital marketing agency group.
S4 has already said it remains on track to double revenues and gross profits organically over a three-year period. That is quite a clip. But that is before taking into account the boost to growth prospects provided by bolt-on acquisitions.
Acquiring lots of companies fast adds cost and complexity at the corporate level. That is a risk to profits. But I remain excited about the growth story at S4 and hope its place in my ISA will be well justified.
My move before the Stocks and Shares ISA deadline
I would consider buying each of these shares in my ISA. The upcoming Stocks and Shares ISA deadline has focussed my mind, but in each case I see an investment case that lends itself to my long-term buy-and-hold investment strategy.
