23rd June 2014
From the start of July UK savers will be able to squirrel away up to £15,000 into their Isa every tax year – up from the current limit of £11,880.
Dubbed the New Isa or NISA, it was announced in the Budget earlier this year and as a result of the overhaul it means you will able to split your tax-free savings as you see fit between cash and stocks & shares, whereas so far savers could only allocate up to half the allowance in cash.
We look at five stocks, as tipped by the experts, that adventurous savers may want to include in their beefed-up NISA.
LOW RISK OPTIONS
Utility groups are hardly viewed as the most exciting bet when it comes to investing but their steady performance and typically robust shareholder payouts via dividends means they remain a favourite among income seekers. A popular pick in the sector is the FTSE 100 listed National Grid, which operates the electricity wires across Great Britain and Northern Ireland. Over the past year its shares have moved up by a respectable 15% and it offers a decent dividend of 5% plus. Right now the consensus among brokers is that the shares are a ‘hold’ but some experts believe further growth is due, as Credit Suisse recently reiterated its ‘outperform’ rating on the stock.
Helal Miah, investment research analyst, at broker The Share Centre, tips the stock as a solid low-risk option for income-seekers. He says: “National Grid overcame some regulatory issues in 2013 and is looking to invest roughly £26bn over the next seven years on its infrastructure. For many portfolios, this stock would form part of a core set of holdings. It is especially suitable for investors looking for an option with some defensive qualities and pays a fairly attractive dividend yield, just above 5%, which the management intends to grow in line with the rate of inflation.”
Another stock widely viewed as one to ‘hold’, the Anglo-Dutch consumer goods group houses a plethora of well-known brands including among many others Pot Noodle, Marmite, Lynx and Dove soap. Viewed widely as a low-risk growth option, its shares have firmed by 5% over the last 12 months and its latest set of results showed the business beat estimates on revenue growth, as it maintains its drive to cut costs and invest in brands. Miah says: “Long-term, Unilever looks attractive as it endeavours to recover costs, expand into emerging markets, improve supply chains and focus on profitable volume growth. It continues to deliver strong returns on capital employed in the business and grow its dividend. We believe the stock has attractions for those investors that want to build a long-term position in a quality global provider of home care and personal products.”
MEDIUM RISK PICK
AMEC serves a range of diversified businesses with operations in areas such as mining, nuclear power, electricity, transportation and infrastructure. But despite its shares being up 26% in just one year, brokers are anticipating there is more to come as the consensus has the stock down as a ‘buy’ with Deutsche being one group to have just reiterated a positive recommendation. For his part, The Share Centre’s Miah is also backing the firm. He says: “The company continues to build on its record order backlog and future growth should be helped by expansion into the emerging regions, along with strategic acquisitions and renewed economic optimism. This should flow through to more meaningful contract awards in the coming years. On a price-to-earnings basis, Amec looks undervalued compared with the peer group and its dividend yield near 3.5% is attractive.”
HIGH RISK PICKS FOR THE ADVENTUROUS
FTSE AIM All-Share listed Avingtrans is a high-risk growth pick, and not for the faint hearted. However the firm, which has enjoyed a 35% share price rise in the past year manufactures pipes for aircraft engines and right now boasts a record book standing at record levels on the back of the booming aerospace industry, a trend that brokers expect to maintain momentum if the latest 10-year contract, worth £55m with Rolls Royce, is viewed as something of a benchmark. Miah tips the company as a ‘buy’ for investors willing to take on a higher level of risk to offer growth to a portfolio. He says: “Although the strength and focus of the group lies in civil aerospace, there are also signs of improvements being made in other areas of the business. This was highlighted earlier in the year with an improving potential pipeline of contracts for the Energy and Medical division. Given that the share price has risen by around 20% since our initial recommendation in October, we believe Avingtrans should continue to benefit from the still robust civil aerospace market.”
Another FTSE Aim All-Share pick; Anpario, which specialises in biochemical attractants for use in the fishing, commercial fishing and aquaculture markets has seen its shares rocket by no less than 86% over the past year. Recommend as a ‘buy’ for those willing and able to stomach a higher risk bet, the fact it has a significant geographical spread helps bolster optimism towards its future prospects. Miah says: “Anpario highlighted a good start to the year and its April results reported improving profits as a result of both organic growth and the 2012 acquisition of Meriden. The performance of the share price last year exceeded our expectations and we decided to take the group off the buy list at the start of January. The share price retreated and following the April results we are happy again to suggest investors build a holding.”