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1 retail stock I’d buy for my ISA, and 1 FTSE 100 stock I’d sell today

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I’ve long taken a favourable view on Urban Logistics REIT (LSE: SHED). Growing e-commerce volumes means this large logistics and warehousing spaces provider can look forward to steady revenues growth during this new decade and beyond. I’d happily buy it in an ISA today.

The coronavirus outbreak is already leading to massive changes in the way global citizens live their lives. It’s a development that’s boosted the demand outlook for Urban Logistics’ spaces significantly too.

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The latest report from the British Retail Consortium reveals why. Online sales of non-food items exploded 57.9% in April as quarantine measures remained in place. And as chief executive Helen Dickinson said: “It is likely that as the lockdown wears on… new shopping habits – such as the trend towards online purchases – will become more entrenched for many consumers.”

At current prices, Urban Logistics trades on a price-to-earnings (P/E) ratio of 18 times for 2020. A tad high on paper. But a figure I reckon is extremely attractive given its bright long-term profits outlook.

One to avoid

You’d be much better off buying shares in Urban Logistics for your ISA than British Land Company (LSE: BLND). Real estate is a traditional go-to sector for nervous investors in uncertain times like these. With the retail industry on its knees though, stocking up on this FTSE 100 share is very-risky business.

British Land and other operators of shopping centres, retail parks and other retail spaces have seen rents slump and the value of their assets sink as Brexit uncertainty has damaged consumer confidence. The troubles of the past couple of years could end up looking like small potatoes compared with the storm it faces following the Covid-19 breakout.

A trading release from Footsie rival Land Securities on Tuesday illustrates perfectly the scale of the pressure the sector faces. In what it describes as “a severe but plausible downside scenario,” the property play says that rent receipts from retail tenants could slump 75% in 2020.

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An ISA timebomb?

The UK-wide lockdown might be getting gradually unwound, but the problems for British Land and its peers are growing. With a shocking recession coming down the tracks, expect the number of retailers going bust to increase and tenants asking for rent reductions in greater numbers. Don’t forget the aforementioned growth in online retailing casts a pall over expected levels of footfall across shopping malls and the like beyond the short-to-medium term too.

British Land’s shares are cheap, as signalled by its rock-bottom forward P/E ratio of 12 times. Its low rating is a reflection of its muddy profits outlook. The FTSE 100 firm’s share price has recovered from the 20-year closing lows hit in March. But I reckon the release of full-year financials on 27 May could send it plunging again. I’d sell it out of my ISA without delay.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Co and Landsec. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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