My Stocks and Shares ISA is key to my overall investment goals. It’s a tax-efficient way for me to receive dividends and keep proceeds when I sell a stock for a profit. Even though the FTSE 100 is doing very well right now, I’m on the hunt for more growth stocks to add. Here’s a list of those on my watchlist.
I can’t ignore AI
There are several key themes that I think hold the key to further growth for some sectors. The first is AI. To position for this, I like Sage Group and Advanced Micro Devices (AMD). Sage has been pushing to roll out AI-powered features, like Sage Copilot, from late last year. It’s doing well already, but I feel there’s scope for much wider adoption and therefore subscription growth.
AMD is unique among chip companies because it doesn’t actually manufacture processing units but designs them. Thus, it should do well going forward because top tech companies will continue to rely on it to design graphic processing units and similar products.
One concern with AI stocks is that valuations are looking a little high, which could spell trouble if sentiment suddenly starts to sour.
Property rebound
Another avenue is property. When interest rates were high in the UK after the pandemic, the sector took a hit. Rates coming lower supports residential homebuilders such as Persimmon, with more buyers able to afford mortgages. It started the year with a 27% jump in private forward sales positions, something that helps to show the emerging demand.
More companies are cutting back on fully remote work in the commercial space. This trickle back to the office should support commercial real estate companies, such as the Workspace Group. Interestingly, the firm also offers co-working and managed office space, so it should benefit even if businesses are looking for a more flexible approach going forward.
Private market interest
Finally, a growing theme is private equity. Public markets have been very volatile recently, so I get why private equity is getting more interest. I’m considering buying shares in 3i (LSE:III). It invests in medium and large-sized companies across Europe and North America. The strategy is usually to take a controlling or significant minority stake and work closely with management to improve performance. Then it looks to sell the stake for a profit.
The share price has been up 29% over the past year. These movements should correlate to the net asset value of the companies owned within the portfolio. Clearly, this shows that the business is smart in its decisions.
One risk is that recent performance has been driven mostly by one company, Action. I’d prefer it to be driven by a host of companies, as it’s a lower risk and more diversified way of operating.
Even with this concern, I think the private markets will be booming for a while to come, so I have this on my watchlist along with the other options.
