Britons need to use their 2019/20 ISA allowance before midnight on 5 April and many FTSE shares now trade at deep discounts due to the coronavirus pandemic. The decline gives ISA investors the chance to swoop in on some bargains. Today, I’d like to discuss two companies that may potentially be appropriate for Stocks and Shares ISAs.
Safety in utilities
FTSE 100 member Severn Trent (LSE: SVT) is one of the three listed water stocks in the UK. It serves almost 8m people. Management believes the group offers “a valuable combination of reliable earnings, long-term asset growth and an inflation-linked dividend”.
Following the recent market crash, most investors are sailing through choppy waters. Therefore April may be an appropriate time for many of us to review our portfolios to see whether they’re built to withstand a potential recession. If you believe we’re entering a period of economic contraction, you may want to add a defensive stock to your portfolio.
SVT is one of the nine stocks that have been recently identified by analysts at Morgan Stanley as key picks in uncertain times. No matter how the economy fares in the near future, we’ll all need to use water and other utilities in our daily lives.
On 31 March, Severn Trust issued a trading update. Management sees “no material change to current year business performance. We continue to expect the Group will deliver full-year trading performance in-line with previous guidance”. These words are likely to bring relief to its customers and shareholders alike.
So far in 2020, this FTSE 100 stock is down about 11%. As I write, the price is hovering around 2,230p. The recent decline has pushed the dividend yield to about 4.2%. And the shares are expected to go ex-dividend next in June.
Animal breeding and genetics
Animal genetics company Genus (LSE: GNS) is a member of the FTSE 250 index. Its investment thesis centres around “improving the efficiency and sustainability of meat and milk production”.
For example, the company owns a patent for commercialisation of pigs genetically edited to resist Porcine Reproductive and Respiratory Syndrome (PRRS). It’s also known as blue-ear disease and causes substantial losses for the global pig industry each year.
National and global pork, beef and milk producers are its customers. It serves over 50,000 customers in over 70 countries. The business is both profitable and cash-generative.
In February, this FTSE 250 group reported strong first-half results for the period to 31 December. Revenue came in at £271m and adjusted profit before tax was a record £30.4m.
A notable highlight was porcine revenues, driven 15% higher thanks to restocking in China. This followed the decimation of pig herds from African swine fever. Asia is an important market for the company.
Year-to-date, the GNS share price, which hovers around 3,250p, is almost flat. And its dividend yield is about 0.9%. I expect the company to keep growing its customer base and margins for the rest of the year.
The bottom line on FTSE shares
UK residents over the age of 16 have a tax-free personal savings allowance of £20,000 which they can invest across various ISA accounts. The two shares featured here may not appeal to you, of course. And if you’re unsure about which industries or companies to concentrate on, a low-cost FTSE 100 or FTSE 250 tracker fund might also be appropriate.
