My ISA Watch List: SABMiller plc And PZ Cussons plc

From 6 April 2015, a new ISA allowance means we can stuff shares to the value of another £15,240 in the attractive tax-free wrapper. That’s an opportunity worth grabbing with both hands.

What should we buy?

In the spirit of Warren Buffett and other great and successful investors, I reckon a quality-led approach to investing can deliver better long-term total returns than a price-led strategy.

Lead by price and we might end up dealing in some ropey old firms that come with hidden dangers. So, it may be better to sift the market for quality companies with great economics and attractive prospects. Once we’ve identified such quality leaders, we can watch them and wait for a sensible entry point — perhaps during a period of general market weakness or when some temporary issue knocks the firm’s share price.

With the aim of building a Champion’s League watch list, lets see why SAB Miller (LSE: SAB) and PZ Cussons (LSE: PZC) make the grade.

Growth in emerging markets

Alcoholic beverage consumption has great repeat-business credentials. Beer is a consumable product with the added investor-attraction of having addictive qualities. That’s why brewer and distributor SABMiller thrives as it attracts consumers to its 200 or so region-specific brands such as Miller Lite, Castle and Grolsch.

Firms with consumable products tend to deliver stable and predictable cash flows, which fuel growth and dividend payments. Last year, around 65% of SABMiller’s revenue came from emerging regions. Such progress in faster-growing parts of the world makes the firm an attractive growth proposition for the longer term.

If  SABMiller keeps its growth momentum in emerging markets recent weaker trading in developed markets such as Europe and America will become less important to the firm in the future. A recovery in lacklustre markets would be nice, but not essential to SABMiller’s ongoing progress.


PZ Cussons (LSE: PZC) runs a stable of consumable goods brands in the personal care, home care, beauty, food and nutrition markets. In the UK, many will be familiar with the firm’s product names such as Carex, Original Source, Imperial Leather, Morning Fresh and Zip. However, last year the firm earned 51% of its operating profit from Africa and Asia, proving that efforts to penetrate fast-growing markets are bearing fruit.

PZ Cussens has a market capitalisation of around £1406 million and sits in the FTSE 250 index on the London stock market. The firm isn’t yet a FTSE 100 titan, which offers the possibility of much more room to grow. That makes the company an attractive investment proposition for those taking the long view.

The watch list so far

Including the firms identified in previous articles, the ISA watch list looks like this:

ARM Holdings



PZ Cussons

SAB Miller and PZ Cussons are attractive candidates for a long-term ISA investment, but I think we need to consider another potential investment as well. Our outperforming analysts at the Motley Fool believe one particular firm is poised for global domination. If you click the link that follows, you can find out more about an exclusive Motley Fool wealth report that examines the hidden story behind one of the most daring e-commerce stealth attacks of 2015. Growth flying under the radar can reward early investors well. You can follow this idea up right now by clicking here.

Kevin Godbold has no position in any shares mentioned. The Motley Fool UK owns shares of PZ Cussons. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.