How I’d invest £20,000 in a Stocks and Shares ISA in March

With the new tax year on the horizon, Stephen Wright looks at the opportunities for investors wanting to fill their Stocks and Shares ISA this year.

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The end of the tax year is coming and March is the last full month for UK investors to use the current £20,000 Stocks and Shares ISA contribution limit. Anything not used by the end of 5 April can’t be carried forward.

With that in mind, it’s important to think about what the best investment opportunities are at the moment. Fortunately, I think there are some attractive choices for investors to consider.

Unilever

Unilever (LSE:ULVR) is currently a business at a crossroads. Despite the strength of some of its brands, it has been carrying a lot of dead weight in terms of less profitable franchises.

The company is moving to divest these and focus on its most promising divisions. I think this should pay off for shareholders in the long term, which is why I’d invest £7,000 at today’s prices.

The biggest danger is that switching brands is easy in the consumer products sector. So there’s always a possibility of customers changing to cheaper products.

Divesting weaker brands should allow the company to put more resources into marketing its strongest franchises to help offset this risk. And a dividend close to 4% makes the risk worth it, in my view.

Forterra

Towards the smaller end of the UK market, I think brick manufacturer Forterra (LSE:FORT) operates in an industry with some favourable characteristics and trades at an attractive price.

Despite a cyclical downturn in a recession, the UK has a long-term shortage of housing. And demand routinely outstrips local supply from manufacturers like Forterra, Ibstock and Michelmersh.

Investors should keep an eye on trends in the construction industry – if housebuilding moves to designs that use fewer bricks, this could change things. And that’s a risk with this company.

However, it’s has been investing in its manufacturing efficiency. So I’d be willing to invest £6,000 based on the idea that these will pay off when the UK construction industry improves. 

Berkshire Hathaway

In the stock market, no investment is ever entirely safe. But Berkshire Hathaway (NYSE:BRK.B) is about as safe as it gets, in my view – $167bn in cash protects a company against a lot of problems. 

I’m not expecting the company to get itself into problems though. Its billionaire investor boss Warren Buffett says that the first rule of investing is not to lose money and it’s an approach Berkshire has stuck to.

With subsidiaries operating in regulated industries, such as utilities and railroads, the threat of outside interference is always a risk. And Buffett wrote about this in a recent letter to shareholders.

Ultimately though, I’d back the company to keep growing steadily for decades to come. That’s why I’d be happy to use £7,000 to buy Berkshire Hathaway shares in a Stocks and Shares ISA.

Finding stocks to buy

When I’m looking for stocks to buy, the key attribute on my list is durability. If I’m going to own part of a business for 10 or 20 years, I need to be confident it’s going to still be around then.

With Unilever, Forterra, and Berkshire Hathaway, I’m confident this is the case. That’s why I’d be happy to divide a Stocks and Shares ISA contribution between those companies before the deadline next month.

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.

Stephen Wright has positions in Berkshire Hathaway, Forterra Plc, and Unilever Plc. The Motley Fool UK has recommended Ibstock Plc and Unilever 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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