2 picks I’d love to add to my Stocks and Shares ISA in July

Stephen Wright is focused on quality investments in his Stocks and Shares ISA. That means great business, but only when the price is right.

| More on:
BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m always looking to make investments in my Stocks and Shares ISA. Over the long term, I believe the best returns come from owning shares in quality companies. 

Equally though, I think it’s important to invest only when the price is right. And right now there are a few stocks I’d like to buy… but only if the opportunity presents itself.

Quality shares

When I invest, I look to buy stocks that will provide returns for a long time. That means the most important thing to find is a business that will prove durable. 

This usually means a firm that dominates its industry or has something that differentiates it from its competitors. This allows the company to generate strong shareholder returns.

The trouble is, shares in these businesses are typically expensive. And even the best shares can be bad investments if the price is too high. 

Despite this, the stock market has a way of doing unexpected things. So it’s worth being prepared for opportunities that might present themselves.


I sold my stake in FTSE 100 distribution company Diploma (LSE:DPLM) just over a year ago at a price of £28.18. The stock is now trading at £41.52.

Diploma isn’t just a distributor. It differentiates itself by offering a bespoke service, strong technical knowledge, and a scale that allows it to get products to customers quickly.

This makes it difficult to disrupt, but I decided the stock was too expensive and sold it. Since then, the company has grown strongly both organically and through acquisitions.

I still find it hard to consider buying it today at a price-to-earnings (P/E) ratio of 48. But if that comes down in July, I’d love to buy it for my ISA again.


CostCo Wholesale (NASDAQ:COST) is one I’d love to own in my ISA. It has the lowest prices in the industry and a business model that helps it maintain this position.

Unlike other retailers, CostCo charges a membership fee to shop in its outlets. Having this additional revenue stream allows it to charge less for products than its competitors.

This attracts more customers, which results in more membership fees and the cycle repeats. It’s a terrific strategy that has taken the stock from $268 to $862 over the last five years.

Given its size, I’ve become a little wary of CostCo’s growth prospects. I therefore wouldn’t buy it at a P/E ratio of 53, but I’d jump at the chance to buy shares at a better price.

Investing: the basics

Fundamentally, for shares in a company to be a good investment, the business has to generate enough cash to justify the current price. That’s the basic idea behind investing.

At the moment, Diploma has a market cap of £5.5bn and generates £187m in free cash – a 3.5% return. CostCo earns $7.4bn with a market cap of $381bn, which is a 1.9% return.

A lot of growth is therefore already priced into both stocks, so I’m watching them from the sidelines for now. But if a better opportunity presents itself, I’ll be ready to make a move.

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 no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

2 of the best US growth and dividend stocks to consider!

These heavyweight US stocks have been delivering tasty investor returns for decades. Here's why they could remain great picks for…

Read more »

Investing Articles

I reckon these 2 penny shares are hidden gems worth a closer look!

Some penny shares are well-known, whereas many others go under the radar, but that doesn’t necessarily mean they aren’t potentially…

Read more »

Investing Articles

Just released: our 3 best dividend-focused stocks to buy before August [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

2 FTSE 100 shares with blockbuster yields investors should consider buying

Our writer has noticed that these FTSE 100 shares offer mammoth dividend yields, and reckons investors should take a closer…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Down 36% and yielding 7.8%, is this FTSE 250 share a bargain?

Christopher Ruane looks at a FTSE 250 share with a sizeable dividend yield and a recent record of dividend growth.…

Read more »

Investing Articles

Is Barclays one of the FTSE 100’s best bargain stocks?

Right now, Barclays' shares are cheaper than those of FTSE 100 rival stocks Lloyds and NatWest. So should I buy…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Is a takeover offer about to boost the Rentokil stock price, and should I buy?

The Rentokil share price is up 10% on takeover rumours. Is it a stock to buy or one to be…

Read more »

Investing Articles

Here’s my Rolls-Royce dividend forecast for 2024-27!

Our writer considers whether the Rolls-Royce dividend might be reinstated in coming years, based on financial performance and stated payout…

Read more »