With the new tax year upon us, I’m building a list of top FTSE 100 and FTSE 250 stocks to buy for my Stocks and Shares ISA.
Up to £20,000 can be invested in these tax-efficient ISA accounts up to April 5 2025. But instead of using a Cash ISA to build wealth, buying equities in a Stocks and Shares ISA (or a Lifetime ISA) could be a better option for individuals.
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.
It’s a road I myself have decided to go down. The FTSE 100 has delivered an average annual return of 7.5% since it began in 1984. And the FTSE 250 has produced an even better equivalent return of 11% since it started trading in the early 1990s.
BIG returns
If this trend continues, and I invested £500 a month in my ISA across a diversified portfolio of stocks, I could make a brilliant £964,467.25 over 30 years.
Here are two stocks I think ISA investors should consider today.
Reckitt
Consumer goods giant Reckitt (LSE:RKT) has slumped in value in recent weeks. Poor sales of its cold and flu treatments last year caused 2023’s sales and profits to underwhelm, fresh financials recently showed. Shoppers have switched down to cheaper alternatives in the cost-of-living crisis.
Adding to the company’s woes, a US jury ruled that itss Enfamil baby formula had caused the tragic death of an infant. Reckitt was ordered to pay $60m in damages, and could face around $2bn in costs from further cases, according to analysts.
Billionaire investor Warren Buffett has made a fortune from buying quality stocks when they’re down. I think Reckitt is now a strong contender for investors who use this strategy.
It has a packed arsenal of desirable labels that I believe will rebound strongly when economic conditions recover. Harpic toilet cleaners, Durex condoms, and Strepsils lozenges are just three of its products that the number one global sellers in their respective product categories.
Today Reckitt shares trade on a forward price-to-earnings (P/E) ratio of 13 times. This is well below its historical average in the late teens to early 20s, and suggests the company is an attractive value stock to buy.
Safestore Holdings
Shares in self-storage business Safestore Holdings (LSE:SAFE) have fallen again in recent weeks. Fears of sustained pressure on its net asset values (NAVs) have grown as hopes of rapid interest rate cuts have receded.
I think this could represent a fresh buying opportunity, though. At 740.5p per share, the FTSE 250 company trades at a healthy discount to its NAV per share. This stood at 880p as of October.
Safestore’s revenues have fallen as consumer spending has dipped. But make no mistake: the long-term outlook for the self-storage industry remains robust. Demand is tipped to be driven by a variety of different phenomena including steady population growth, the buoyant rentals market, and the ongoing growth of e-commerce.
Safestore is rapidly expanding to capitalise on this opportunity, too. It has a huge property pipeline of 1.4m sq ft and has several new stores already in 2024.
