UK stock investors don’t have much time to max out their ISA allowance for the current tax year. The April 5 deadline for the 2020/21 period is now less than a month away. Those who want to make the most of their £20,000 annual investment allowance had better act fast.
I’ve continued to buy UK shares for my Stocks and Shares ISA despite the uncertain economic outlook. And I plan to add to my shares portfolio before that early April deadline comes into effect too.
Here are two quality British stocks that I’m thinking of buying in the near future.
#1: A high-tech UK share
I think businesses like Avast (LSE: AVST) could be some of the hottest growth shares for this decade. The broader IT services space is ripe with opportunity for UK share investors as the digital revolution rolls on. And those that specialise in tackling the growing threat of cyber attacks could prove exceptionally strong profits generators during the 2020s.
A new report from Vodafone illustrates the huge potential cost to British business alone of such attacks. It suggests that up to a quarter (or 1.3m to be exact) of small UK companies would collapse under the cost of a typical cyber hit. Incredibly the study suggests that 31% of domestic SMEs have seen an increase in online attacks since the first Covid-19 lockdown of last March.
I’m backing Avast to enjoy strong and sustained demand for its products in the post-pandemic landscape. Bear in mind though that this UK share doesn’t come cheap, trading on an elevated price-to-earnings (P/E) ratio of 21 times. This could cause a sharp share reversal if trading performance worsens for any reason. For example, US tech titans like Apple, Google and Microsoft all have the scale and the knowhow to potentially wallop smaller operators like Avast in their own backyard.
#2: Get some porky dividends!
I’m also considering buying sausage skin maker Devro (LSE: DVO) for my Stocks and Shares ISA. This UK share’s products aren’t anywhere near as complex as those of Avast. But they are also timeless and rising in popularity in fast-growing emerging markets as the wealth of these markets’ consumers continues to expand.
It’s why Devro built a new factory in China in 2016, and why I expect the food producer to keep investing heavily in Asia. A word of warning, however — the growing popularity of meat-free diets on ethical and environmental considerations may put a dent in future profits growth. Market researcher Euromonitor International predicts that demand for meat substitutes in Asia Pacific soared 11.6% year on year in 2020.
I think that Devro still merits serious attention at current prices though. Not only does the food share trade on an undemanding forward P/E ratio of around 12 times. The company boasts a meaty 5.5% dividend yield for 2021 too.
Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Apple and Microsoft. The Motley Fool UK has recommended Avast Plc and Devro and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. 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.