3 top share ideas for an ISA

The 2022/2023 ISA deadline is less than a week away now. Here, Edward Sheldon provides three share ideas for this year’s ISA allowance.

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Investing within an ISA (Individual Savings Account) generally makes a lot of sense. With these accounts, the gains and income received from investments are completely tax-free. Here, I’m going to provide three share ideas for an ISA today. I think these shares look attractive as we approach the 2022/23 ISA contribution limit deadline.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

A FTSE 100 growth stock

One growth stock that strikes me as a good pick for an ISA right now is Ashtead (LSE: AHT). It’s a leading equipment rental company that operates in the US, Canada, and the UK.

The reason I’m bullish on Ashtead is that the company generates a large proportion of its revenues in the US. And right now, the US is in the middle of a massive ‘reshoring’ campaign designed to eliminate its supply chain vulnerabilities.

This is benefiting the group. For the nine months to 31 January, equipment rental revenue in the US was up 27% year on year.

Our business is performing well with clear momentum in strong end markets, which are enhanced by the increasing number of mega projects and recent US legislative acts.

Ashtead CEO Brendan Horgan

Now, Ashtead operates in a cyclical industry. So, a deep recession in the US could throw in a spanner in the works here.

However, with the shares trading on a forward-looking price-to-earnings (P/E) ratio of 15.5 right now, I like the risk/reward set-up.

It’s worth noting that analysts at Jefferies have a 7,000p price target for the stock – about 45% above the current share price.

A dividend play

Moving on to dividend stocks, one I like in this area of the market is Renewables Infrastructure Group (LSE: TRIG).

It’s a renewable energy investment company that owns a broad portfolio of wind and solar farms across the UK and Europe. Its goal is to provide steady returns to shareholders through dividends.

TRIG has been a reliable dividend payer in recent years and for 2022, it declared a dividend of 6.84p per share. That equates to a yield of around 5.6% at the current share price.

For 2023, it’s aiming to raise its payout by 5% to 7.18p per share. That translates to a yield of 5.8% today.

It operates in a market with attractive fundamentals. However, a risk here is that the company sometimes needs to raise money to fund its expansion. This can put pressure on the share price in the near term.

So, a long-term horizon is crucial with this stock.

A small-cap stock for big gains?

Finally, those with a higher risk tolerance may want to check out small-cap stock Cerillion (LSE: CER).

It’s a British technology company that provides software to telecommunication companies.

It has been a while since Cerillion provided an update on its performance. However the last update, in November, was very encouraging. Here, the company told investors that it had a record order book and that the market backdrop was “extremely favourable”. It added that its new business pipeline was “very strong” and included a number of large deals.

This risk here is that enterprise spending could stall in the short term due to economic uncertainty. This could hurt the stock, which is priced for strong growth (the P/E ratio is about 28).

So again, a long-term mindset is important here.

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 assessed. Consider taking independent financial advice.

Edward Sheldon has positions in Ashtead Group Plc and Cerillion Plc. The Motley Fool UK has recommended Cerillion Plc. 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.



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