With the 5 April deadline around the corner, I’m building a list of stocks, investment trusts and funds for ISA investors to consider. Rather than depositing cash and buying later on, I think now could be a good time to think about purchasing them in a Stocks and Shares ISA or Lifetime ISA straight away.
Here’s why.
Babcock International
At 717p per share, I think Babcock International (LSE:BAB) offers exceptional value for money right now. A price-to-earnings (P/E) ratio of 14.2 times for the upcoming financial year (to March 2026) makes it one of tech defence sector’s cheapest operators.
BAE Systems and Senior, for instance, trade on much higher multiples of 22.3 times and 18.1 times respectively.
Babcock provides a wide range of engineering, training and support services to NATO countries including the UK, France and Canada. This gives it an excellent opportunity to grow revenues as spending across the defence bloc rapidly rises. Latest financials showed organic revenues up 11% in the six months to September.
Having said that, the FTSE 250 company could be exposed to a potential cut in US arms spending. Industry peer QinetiQ‘s warning last week of “challenging US market conditions” and subsequent profit warning underlines a potential storm for Department of Defense suppliers.
But Babcock’s far less exposed to defence budgets in Washington than other major defence picks. Just 4% of group revenues come from the whole of North America.
Scottish Mortgage Investment Trust
At 965.6p per share, Scottish Mortgage Investment Trust trades at a 9.9% discount to its net asset value. This deserves serious attention, in my book.
The tech trust’s slumped as investors weigh the potential impact of US trade tariffs on companies such as Amazon, Nvidia and Mercadolibre. Signs of an increasing image problem for Elon Musk — the trust holds shares in both Tesla and SpaceX — haven’t helped Scottish Mortgage’s cause either.
But I think investors should look past this short-term noise and consider buying at current prices. The FTSE 100 trust’s delivered an average annual return of 15.7% as the digital economy has kept rising. I’m confident it will continue producing solid investor profits, driven by fast-growing sectors including artificial intelligence (AI), robotics and quantum computing.
L&G Cyber Security ETF
At £22.06 per share, the L&G Cyber Security ETF has also dipped on fears over trade wars and a slumping global economy. Like Scottish Mortgage, I think this represents an attractive dip-buying opportunity to think about.
Investing in single cybersecurity companies can be highly risky. One system failure can prove disastrous for a company’s reputation and, by extension, for future revenues.
While they don’t eliminate this threat entirely, an exchange-traded fund (ETF) like this L&G product can substantially reduce the risk. In total, it holds shares in 33 companies including Cloudflare, Trend Micro and CrowdStrike. This wide scope can substantially lessen the impact of localised problems on shareholders’ returns.
I think this fund has significant growth potential as the number of online threats grow. It’s delivered an average annual return of 14% since March 2020.
