My Stocks and Shares ISA is home to some stocks that I hold for long-term growth. Given that I don’t have to pay any capital gains tax on profits from shares within my ISA, aiming for high return opportunities makes sense. Here are two companies that I think have large upside potential in coming years that I’m thinking of buying now.
Getting access to private equity
The first company I like is Abrdn Private Equity Opportunities Trust (LSE:APEO). The trust sits in the FTSE 250, and does what it says in the name. It invests in a selection of private equity funds and places money with unlisted companies with the aim of generating long-term capital appreciation.
Private equity has come back in fashion in recent years. Some large deals have been seen recently in all areas of the market. Given the uncertainty in the market at the moment, I think private equity companies will be able to snap up some great deals over the next year or so. It’ll also be able to make investments in struggling companies that aren’t listed on the stock market, that I personally wouldn’t be able to access.
Putting this all together, investing in this trust gets me access to everything, with no high minimum investment amount. The share price is down 5% over the past year. However, it trades at a large 41% discount to the net asset value. If this discount reduces, as well as seeing the fruits of returns from selling restructured businesses in years to come, I think my gains overall could be large.
One risk I do note is that the trust has a focus on Europe. Given the war in Ukraine and soaring gas prices, this region might not perform as well as the UK.
Flying high in my Stocks & Shares ISA
The second business I’m considering is easyJet (LSE:EZJ). Down 48% in a year, the business is currently trading lower than it was just after the March 2020 market crash. My idea here is that this might be a high-risk play, but one that could yield rich returns in my ISA.
The airline sector has been hampered over the pandemic, with easyJet being no different. Further, the company has struggled this summer, due to the shortage of staff and the issues at major UK airports. I feel that we have reached peak pessimism for the share price. Of course, going bankrupt would send it down again, but I think most of the potential risks for the business are firmly reflected in the current share price.
On the upside, easyJet flew 22m passengers in Q3, more than seven times the same period last year. It also achieved a yield per passenger of £22.07, which is higher than pre-pandemic! Finally, the net debt stands at just £0.2bn which is roughly 0.2 times EBITDAR. This is a low and manageable level, in comparison to other airlines that have much larger debts that could cripple the airlines.
I’m not expecting the share price to explode over the course of the next few weeks. But as a long-term pick for my ISA, I think that the risk/reward looks very attractive at current levels.
