We haven’t reached the end of 2022 yet, but I’m already thinking about the shares I might add to my Stocks and Shares ISA in 2023. So which ones are on my shortlist?
I’m already invested in the hard-pressed finance and housebuilding sectors. And while I think there are some great buys there, I have enough exposure for now.
Investment trust
But I can’t have enough of investment trusts. I can target specific investing approaches, while also getting some handy diversification. And I think that’s especially important during tough times.
So I’m thinking of adding Alliance Trust (LSE: ATST). Its dividend yield is low at 2.5%. But it’s lifted the dividend every year for 55 years in a row. The trust invests for total returns, including growth, and that’s led to a 150% share price rise in the past 10 years.
Alliance Trust invests in global equities, and I’d like some of that for the next decade or so, as I reckon growth could come from just about anywhere. Of course, the risk could come from anywhere too, and I’d be exposed to geographic downturns.
But my investments are currently UK-focused, and I think a bit of worldwide diversification could do me some good.
FTSE 250
I’m invested mostly in FTSE 100 stocks, but I see plenty of attractive FTSE 250 opportunities for the coming year. ITV (LSE: ITV) is one of them.
ITV shares have lost a third of their value in the past 12 months. That puts them on a forecast price-to-earnings (P/E) ratio of under 7.5. And it pushes the expected dividend yield as high as 6.7%.
The broadcaster and TV content maker certainly faces risk. In particular, I think we could see a downturn in TV advertising spend in the coming years. It tends to be reined in during economic downturns. And it looks like earnings could dip next year.
But with a long-term view, ITV has been doing well in the advertising market. And I expect that to continue in the coming decades.
The bottom line for me is valuation. I see the shares as oversold and undervalued.
Growth stock
My holdings are almost entirely dividend based, and I’d like to find a space for a growth stock in 2023. I keep coming back to cybersecurity specialist Darktrace (LSE: DARK).
We had a period of excitement that sent the share price flying. But there was plenty of negativity too, and short-sellers piled in. And the bubble burst.
That kind of thing happens with many tech growth stocks. But things seem to be settling now, any pump-and-dump merchants that might have been around have gone. And the short selling is a thing of the past.
Forecasts suggest profits from 2023-24 onwards, though very small to start. There’s still plenty of early growth stock risk here.
Will I go for a small investment? I don’t know yet. But I’ll definitely come back to Darktrace in early 2023. We’re due trading updates in January and February.
