I’ve got to be honest, my SIPP underperformed in 2023. I invested in several companies that I thought were great for the long run — the beauty of the SIPP being my ability to take a very long-term perspective — but they are yet to perform.
As is the way with SIPPs, I make regular — monthly — contributions to my portfolio and these are complemented by tax relief. And as such, I’m always on the lookout for high-potential companies to add to my portfolio — although several of them may already be in my Stocks and Shares ISA.
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So, here are three companies I’m looking at to supercharge my SIPP in 2024.
AppLovin
AppLovin (NASDAQ:APP) is a software firm that helps its clients maximise their advertising revenue.
It operates in a rapidly growing industry and has seen remarkable revenue growth over the past 12 months, a trend that is expected to continue.
Amazingly, the stock is up 324% over the past 12 months. It’s even been more successful than Nvidia and Rolls-Royce.
However, its valuation metrics remain reasonably attractive. The stock trades at 46 times forward earnings, but it has a price/earnings-to-growth (PEG) ratio of 0.63.
The PEG ratio — which is an earnings metric adjusted for growth — suggests that AppLovin is undervalued appreciated by as much as 37%.
This low PEG ratio is made possible by projected EPS growth of 20% over the next three-to-five years.
I’ve already got this one in my ISA, but I’m looking to add it to my SIPP.
Li Auto
Li Auto (NASDAQ:LI) is the first Chinese electric vehicle newcomer to turn a profit, and it looks like the big winner in general.
While NIO and XPeng suffered from extended Chinese lockdowns and supply chain constraints, Li Auto has gone from strength to strength.
Building on its recent success, Li is now aiming to more than double its range, with 11 vehicles by 2025.
Analysts contend that Li has performed particularly well because of range anxiety. Only one its four of its current offering is a pure EV.
And in large countries like China and the US, range anxiety is a big issue. That’s why Li’s L9 — which has two electric motors and one combustion engine — is so attractive, offering a 1,100km range.
It may still face challenges entering the international market, but that appears to be priced in.
In fact, Li is among the cheapest companies I’ve come across with a PEG ratio of 0.04 and expected EPS growth of 594% over three-to-five years.
Down at $35, it might be a good opportunity to add this stock to my SIPP.
Rolls-Royce
Rolls-Royce trades with a PEG ratio of 0.55 despite surging 220% over the past 12 months. Like AppLovin, the surging share price doesn’t mean the value play has been exhausted. Reassuringly, Rolls keeps beating analyst estimates.
Some may say that Rolls is too dependent on the civil aviation sector. After all, the reduced demand for flying hours had a profound impact on the company during the pandemic.
However, the forecasts are extremely strong in civil aviation, with 40,000 new aircraft expected to enter the global fleet by 2042, while defence and power systems are growing steadily.
Once again, I already own Rolls, but not yet in my SIPP.
