ISAs - 5 Things You Need To Know

Friday, Mar 09

Whether you're new to investing or an experienced trader, there are a host of benefits to investing in a Stocks & Shares ISA. Stocks and shares ISAs offer the possibility of higher returns than cash Isas, but only if you're happy to take some risks with your savings. While a cash Isa is simply a tax-free savings account, a stocks and shares Isa is a tax-efficient investment account that lets you put money into a range of different investments. These include unit trusts, open-ended investment companies (Oeics) and investment trusts, as well as government bonds and corporate bonds. You can also buy individual company shares and put them into your ISA. So, unlike with cash Isas, you should only invest if you're prepared to take the risk that your investments can go down, as well as up, in value.

HOW MUCH CAN I INVEST?

You can invest up to £20,000 in the 2018/19 tax year. The Government sets a limit on how much you can invest in an ISA each tax year. There’s no catching up next year if you don’t invest the full amount, so it’s a case of ‘use it or lose it’.

EASY ACCESS TO YOUR MONEY

Unlike pensions and child trust funds, your money is not locked into your Self-select Stocks & Shares ISA for a period of time. Although we recommend a medium to long term approach to investing, you’ve got the flexibility to withdraw your money whenever you want or need it.

SMALLER COMPANIES ARE ELIGIBLE IN STOCK & SHARES ISAs

Shares listed on London’s junior Aim market can now be held in Isas. Many such shares are exempt from inheritance tax. While these can carry more risk, there is the potential for excellent returns.

JUNIOR ISA TRICK

Children aged 16 can hold both a Junior ISA and an adult ISA for two years. That means a total tax-free allowance of £38,640. This is a great way of maximising tax-free returns!

NOT REQUIRED ON YOUR ANNUAL TAX RETURN

Also of benefit is that you do not have to note investments in an ISA on an annual tax return if you file one. One less thing to worry about! The extent and value of any ISA tax advantages or benefits will vary according to the individual's circumstances.

How did we do in 2017?

Last year we published our top 5 growth picks for 2017 and almost 12 months on its time to reflect on that performance.
The report was published on the 29th March 2017.

HOW DOES THIS COMPARE WITH THE BENCHMARK?

Since we published our 2017 recommendations the total return on the FTSE100 has been -0.43% versus the collective return on our picks on 52.75% (this figure excludes any costs).

At its peak the recommendations were up 66.7% on the 4th January 2018. The most the recommendations underperformed the benchmark index was in May 2017 by 2.08%.

We have benchmarked against the FTSE100 to simply demonstrate what performance levels should reasonably be expected. The FTSE250 in the same timeframe produced returns of 4.95%.
The extent and value of any ISA tax advantages or benefits will vary according to the individual's circumstances.

5 Stocks to consider for your ISA for 2018

1. BODYCOTE (BOY)

Company Description

Bodycote PLC is a holding company. The company, through its subsidiaries, manufactures and distributes metal technology, operates isostatic pressings, and provides metallurgical coatings.

Technical Analysis

Bodycote PLC is trending higher on a both a price and relative basis on the medium to long term charts. The shares are in a consolidation phase having broken above major resistance at 833p. We expect to see the support at 833p continue to hold having completed a large bottom pattern on the weekly chart. The implied upside target is 1175p.

Fundamental Analysis

Thermal processing services provider Bodycote PLC has entered into a long-term agreement with aerospace technology group Safran SA. Under the agreement, Bodycote PLC will provide manufacturing services, including thermal spray coatings, electron beam welding, hot isostatic pressing, heat treatment and other services to companies in the Safran group and their key strategic first-tier suppliers. Jefferies International on the 22nd February reaffirmed its buy investment rating on Bodycote PLC and set its price target at 1100p.

https://image.ibb.co/iFM0k7/bodycote_stock_price.png

Target: 1175p

2. HUNTING (HTG)

Company Description

Hunting PLC is an international energy services provider to upstream oil and gas companies. The company manufactures, supplies and distributes products that enable the extraction of oil and gas through its well construction, well completion and well intervention divisions.

Technical Analysis

Hunting PLC has recently broken out above 650p, which had capped the upside dating back to 2015. This completes a large inverse head and shoulders pattern on the weekly charts and suggests that significant upside is possible over the medium to long term. We believe there is excellent potential here and the bottom formation implies a target of 1055p on the upside.

Fundamental Analysis

Hunting PLC returned to annual profit due to strong performance from its Titan business. 2017 revenue rose significantly to $722.9m from $455.8m a year previous. Elsewhere across the group, cost cutting initiatives and general market stability have helped narrow losses. We expect further upside over the medium term. On the 5th March Numis reaffirmed its buy investment rating on Hunting PLC and raised its price target to 848p.

https://image.ibb.co/gqOKdS/hunting_stock_price.png

Target: 1055p

3. SENIOR (SNR)

Company Description

Senior PLC is a holding company. Through its subsidiaries, the company manufactures specialist engineering products for the automotive, industrial and aerospace sectors. Products include flexible tubing, fluid transfer devices, de-icing systems, assembly components for jet engines, and parts for automotive air conditioning systems. The Group operates internationally.

Technical Analysis

Senior has broken convincingly above resistance at 245p. This level has also held on a pullback to retest the new support and has done a pretty good job. We expect this support to continue underpinning strength. The bottom pattern has a measured upside move towards 250p, which is our profit target over the medium to long term.

Fundamental Analysis

The last set of results posted by Senior PLC saw the company deliver numbers slightly ahead of expectations with the company delivering solid performance in challenging trading conditions. The companies free cash flow has increased by 20% and the companies ongoing cost reduction actions have positively impacted on its overall performance. In the last year the Senior share price has risen 59%. That’s a better performance than industrial sector peers Rolls-Royce Holding PLC and BAE Systems PLC.

https://image.ibb.co/fvSUdS/senior_stock_price.png

Target: 335p

4. SIRIUS MINERALS (SXX)

Company Description

Sirius Minerals is a UK based fertilizer development company focused on the development and operation of its polyhalite project in North Yorkshire.

Technical Analysis

The shares have broken above the downtrend resistance line and look poised to keep pushing higher in the short to medium term.
The moves over the past couple of years have typically been quite volatile but there is a clear sequence of higher lows which has been building. The break higher signifies bullish momentum. Look for a move towards 35p.

Fundamental Analysis

Shares in Sirius Minerals are on the up as sentiment turns bullish following the signing of a deal with DMC mining services.
Last year the company raised $1.2bn to commence construction. With cash in the bank the company can push on with production and the financial stability should attract additional partners. We believe the company has fantastic potential and recommend buying here.

https://image.ibb.co/cCXbsn/sirius_minerals_stock_price.png

Target: 50p

5. VICTREX (VCT)

Company Description

Manufactures and sells a thermoplastic, under the trade mark PEEK. Their PEEK products are used primarily by compounders and processors, in order to manufacture products in a range of industrial applications.

Technical Analysis

The long-term trend of Victrex is quite impressive, with corrections typically attracting buyers. The shares are making new highs on a both a price and relative basis and we see no signs of this stopping any time soon. We remain buyers on pullbacks and have an upside target of 3000p over the medium to long term. The preferred trade is to buy on setbacks towards support at 2200p.

Fundamental Analysis

Victrex continues to be a hugely profitable business. Three of its products in development, spinal, dental and knee implants, underpin a substantial part of Victrex's strategy to grow revenue by an additional 10% to 20% in the medium term by fashioning products, or semi-finished products. In mid-February the shares were upgraded by Bank of America Merrill-Lynch to ‘Buy’.

https://image.ibb.co/ixKZdS/victrex_stock_price.png

Target: 3000p


Please see the PDF below for the full, detailed report.


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