March is now upon us, as the first quarter of the year is almost complete. That means I’ve still got time before the ISA deadline in April to finish using my current year allocation. I’m putting all of this towards my Stocks and Shares ISA. Cash ISA rates are just not attractive enough for me, and I think I can outperform the 1.15% (the best I’ve seen) from my own FTSE 100 stock picks. I know that any gains I make from my stock picks when I sell them don’t incur capital gains tax within my ISA. So which FTSE 100 stocks should I buy?
There’s no doubt that there has been a huge amount of interest from retail investors in financial markets over the past year. One business looking to benefit from this is St. James’s Place (LSE:SJT). The UK based wealth manager provides investment advice to clients, and holds their assets under management. As of the end of 2020, this asset figure stood at £123.9bn, a record for the business.
Net inflows for the year came in at £8.2bn, reflecting the surge in interest from both new and existing clients. On the basis of the strong performance, a dividend of 38p per share has been proposed. This is more interesting when I consider that the 2019 final dividend was withheld. I think the outlook for the FTSE 100 firm seems good for 2021 onwards. Continued volatility should represent an opportunity to generate more commissions from investments.
The risk with SJP is the continued loss-making operations in Asia. This aspect of the business is not helping the overall group performance. For example, in 2019 and 2020, expenses exceeded income by around 5 times. The business expects a positive breakeven for Asia by 2025, but this is someway away.
A traditional FTSE 100 stock
Burberry (LSE:BRBY) is another FTSE 100 stock I’d look to buy in March. Although it’s a traditionally British fashion designer and manufacturer, I’d buy it for its focus on the Asian market. Asia is further along the curve than the UK or America with regards to its Covid-19 recovery. This was shown from the Q3 results, with full-price store sales in Asia up 11%. EMEA and the Americas were down, which dragged on results. However, it shows to me that the problem isn’t a lack of demand, but rather pandemic restrictions.
This can also be backed up by online sales. Digital full-price sales grew by 50% in Q3, a great result. From here, I think the FTSE 100 stock is one to buy on lockdown easing measures. Should EMEA follow suit in opening Burberry stores later this summer, revenues should substantially increase, as in Asia.
Concerns I have for the stock include the luxury fashion sector it operates in. Demand for luxury goods ebbs and flows and its ultra-luxury strategy, while it appears to be working, does leave it exposed to future downturns. It also needs to ensure that it works hard to maintain its appeal in a fickle fashion segment, and there’s currency risk too as it continues to focus on international growth. Meanwhile at home, there are fears that the end of the VAT retail export scheme could hurt its UK revenues when shopping tourism restarts post-pandemic.
But it appears to me to be successfully navigating the turbulent waters it sails in so I’d buy it today.
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jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry. 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.