Turbocharge Your ISA With BHP Billiton plc, Royal Dutch Shell Plc, Debenhams Plc And BAE Systems plc

BHP Billiton

While the diversification of BHP Billiton (LSE: BLT) has often been discussed as a positive for the company, it has not enabled it to overcome the challenges present in the mining sector during recent months. However, it has been able to deliver a generous level of profitability, with it having a very low cost curve and being able to maintain high levels of production so as to put the squeeze on its smaller peers. This should allow it to occupy a stronger position on a relative basis over the medium to long term.

In addition, BHP Billiton offers excellent value for money at the present time, with its yield of 5.1% indicating that its shares are very attractively priced at the current time. As such, they could be due for a considerable rise in the long run.


On the face of it, oil stocks such as Shell (LSE: RDSB) (NYSE: RDS-B.US) look somewhat unappealing at the present time. After all, the oil price is at a low ebb (and could decline further) and Shell’s earnings are coming under severe pressure because of that. Furthermore, Shell trades on a price to earnings (P/E) ratio of 16.6, which is slightly higher than the FTSE 100’s P/E ratio and indicates that there is a lack of value on offer with the oil major.

However, Shell is forecast to make a strong comeback next year, with its bottom line expected to rise by 32%. When this growth rate is combined with its rating, it equates to a price to earnings growth (PEG) ratio of just 0.4, which indicates that Shell offers a wide margin of safety and could be a strong performer over the next few years.


A major plus for investors in Debenhams (LSE: DEB) is the fact that the consumer environment in the UK is rapidly improving. For example, disposable incomes are rising in real terms for the first time in a number of years, and this could have the effect of making shoppers return to the mid-price point outlets, such as Debenhams, that have been somewhat squeezed in recent years.

Of course, Debenhams has suffered from challenging trading conditions in the recent past, and its share price fall of 25% in the last eighteen months is reflective of this. However, with it now trading on a P/E ratio of just 10.4, it has tremendous scope for an upgrade to its rating over the medium to long term.


Also suffering from challenging trading conditions in recent years has been BAE (LSE: BA), with austerity across the developed world hurting its bottom line. However, an improving outlook for the US economy in particular (which has a vast defence budget) means that BAE’s future is much brighter now than it was even six months ago. As such, investor sentiment has improved dramatically and its shares have made gains of 17% during the period.

However, there is still scope for further capital gains, since BAE trades on a P/E ratio of just 13.8 which, for a high quality stock with a strong balance sheet and impressive cash flow, seems rather low. As such, BAE could see its share price move much higher in 2015 and beyond, which makes it a strong candidate for your ISA right now.

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Peter Stephens owns shares of BAE Systems, BHP Billiton, Debenhams, and Royal Dutch Shell. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.