I’ve recently opened a Stocks and Shares ISA and it’s sitting there, waiting for me to fill it up. I’ve spent most of the year playing with my self-invested personal pension (SIPP). Most of that money is allocated now. None of my ISA allowance is.
I don’t have much capital to invest so I’ll invest regular monthly amounts instead. I can commit to £300 a month.
This means I can afford to be patient about the pace of the stock market recovery. While I hope the FTSE 100 blasts to 8,000 and beyond in 2024, I’ve no idea if it will. Much depends on when central bankers start cutting interest rates and whether we get a recession in the interim. These things are out of my hands.
Little and often does it
By investing little and often, I can afford to sit back and let events take their course. The one thing I can control is the shares I choose. So which three should I buy?
I’m not saying these are my three favourite FTSE 100 stocks. That honour currently belongs to beaten-down spirits giant Diageo, ultra-high yielding fund manager M&G and fast-growing private equity manager 3i Group, which are already safely inside my SIPP.
Investing isn’t simply about throwing money at the companies I like most. It’s about building a balanced spread of investments, and I’ve got gaps to plug.
I’ve had a BAE Systems-sized hole in my portfolio for ages, and it’s about time I filled it. The security and aerospace giant is a rare beneficiary of today’s warlike world. Its shares are up 29.44% over 12 months.
BAE added another £10bn to its swelling order book in Q3, lifting the annual total to £30bn. It’s also returning another £1.4bn to shareholders through buybacks and dividends. Recent strong share price growth (it’s up 91.07% in two years) may limit the scope for future gains but it doesn’t look too expensive trading at 18.93 times earnings.
Mind the gap
Equipment rental service Ashtead Group is another stock I’ve been wanting to buy for ages that’s always been too expensive due to its phenomenal growth. It’s up 173.74% over five years but dipped 7.23% over the last year.
Ashtead has massive exposure to the US to its Sunbelt Rentals subsidiary and has benefited from President Joe Biden’s infrastructure splurge. That process may have peaked, hence the share price dip. It now looks reasonably valued at 15.45 times earnings.
I don’t hold any pharmaceutical stocks and I’m going to amend that by investing in GSK. Its shares have laboured for ages, including under its previous guise as GlaxoSmithKline, while the dividend has been frozen, too.
The share price is down 12.98% over five years and up just 1.22% over 12 months. It looks attractively valued at 10.11 times earnings and the yield has crept up to 4.36%. Q3 sales rose 10% to £8.15bn and GSK reckons it’s making “significant strides” with its all-important drugs pipeline.
I’ll invest £100 a month in each by direct debt, and largely forget about them. That way, it doesn’t really matter whether markets rally in 2024, 2025 or whenever. Just as long as they do at some point
