I think having a Stocks and Shares ISA is one of the most important things to do when attempting to grow wealth. Of course, it also takes research to decide on the right companies to invest in.
This week, I’ve spotted two great businesses from the FTSE 100 that I’m looking to add to my portfolio soon. They’re both on my watchlist for when I next invest through my ISA.
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.
Halma
One company that’s caught my attention for a while, Halma (LSE:HLMA), stands out to me for its great ethos of making the world “safer, cleaner and healthier”. It operates 45 businesses over three segments: safety, environmental and analysis, and medical equipment.
I’m not sure it gets much better than this when choosing shares from Britain. I’ve taken note of its industry-leading net margin of 12.4% and its top-notch 11.4% revenue growth rate as an average over the last three years.
Of course, great companies often have the same risk, and with Halma, it’s no surprise. Its price-to-earnings ratio is around 26; it’s not necessarily cheap, then. Also, as the firm has operations all over the world, any disruptions to its supply chain from new events similar to the pandemic would cost the business heavily.
But, trading 32% below its high, it’s certainly worth my buying. The question isn’t if; it’s when.
Rightmove
If you’ve ever rented or bought a property in the United Kingdom, I’m sure you’ve heard of Rightmove (LSE:RMV). After all, it’s the country’s largest online property retailer. The company includes buyers, renters, agents and home developers. It even has a mortgage calculator, which I’ve found incredibly useful.
A strong balance sheet with more equity than debts, a hefty 56% net margin and a reasonable price-to-earnings ratio of around 20 all make me interested in buying a stake. Also, I like the fact it’s grown its earnings at 12% per year on average over the last 10 years.
A couple of risks to note here include an also not-great dividend yield of just 1.6%. Furthermore, as a company that’s highly dependent on the housing market, any negative impacts from macroeconomic pressures could seriously affect returns.
But, also down 31% from its high, it looks like a no-brainer buy to me.
Long-term investing
The trick I’ve found works for me is buying stakes in great businesses at a reasonable price. By simply having time in the market, I think building a nice level of wealth isn’t unreasonable to strive for.
Of course, I always make sure I keep a cautious mind and try to diversify my investments. Therefore, I wouldn’t want to own just these two. Around 10-15 great companies seems about right to me when crafting my perfect portfolio.
