The Stocks and Shares ISA deadline is fast approaching. That’s because 5 April signals the end of the tax year. At that point, the £20,000 limit that investors are can invest up to each year will reset.
Many investors tend to rush into buying stocks around this time for fear of missing out on potential tax-free gains. While I’d never advocate that, I’ve had my eye on these two for a while. If I have the spare cash, I hope to pick them up over the coming days.
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.
Unilever
The first of these is Unilever (LSE: ULVR). The stock has got off to a strong start this year. But it’s still down 6.6% in the last 12 months, so I see an opportunity.
There are a few reasons I like the business, including its recent decision to spin off its ice cream division. It announced a plan earlier this month, which will see the company cut 7,500 jobs in a bid to save £684m over the next three years. This feeds more widely into the firm’s Growth Action Plan.
I think this is a smart play. Running its ice cream division is capital-intensive. Through streamlining, the business will be able to focus on its stronger assets. This is something that many shareholders have been hoping the business will do for years.
Steps such as these should help Unilever grow earnings in the times ahead and, as a result, grow its dividend too. Right now, it yields 3.8%. That’s in line with the FTSE 100 average and has seen steady growth over the last decade.
Unilever faces a few challenges. Inflation is an ongoing risk that has forced the firm to increase its prices. This could see consumers switch to cheaper alternatives. Its restructuring plans inevitably may further pose challenges.
However, I like its defensive nature. It sells essential products that are used by 3.4bn people every day. It’s such companies that I want to own.
Games Workshop
I’m also looking to increase my holdings in Games Workshop (LSE: GAW). In the past five years, the stock has surged. I think it can keep performing going forward.
Like Unilever, it offers a passive income opportunity through its 4.3% yield. However, that’s not the reason I want to buy more shares.
The main factor for me is its dominant market position. It’s the frontrunner in the tabletop wargaming industry and right now has little competition. Looking back at its impressive revenue growth in the last decade is evidence of how beneficial this has been for the firm.
The business attracts millions of players and many of its boxsets are sold out within just a few days of being released. Nevertheless, the firm has no plans to slow down. It’s now broadening its horizons as it vies to turn its Warhammer universe into film and TV content.
Of course, with the UK in a ‘technical recession’, there’s the threat that sales will slow in the times ahead. What’s more, it’s trading on a high 23 times trailing earnings.
However, with its loyal customer base and ambitious plans, I’m bullish on Games Workshop.
