September 25, 2022

How I’d invest £20,000 before the ISA deadline

The deadline for the Stocks and Shares ISA is only a few weeks away, but what are the best growth stocks to buy before then? The...
Photo by Milad Fakurian

The 5 April is nearly upon us, which means the deadline to maximise my Stocks and Shares ISA is almost here. With around a fortnight left, the question in plenty of British investors’ minds is how to take advantage of the tax-free allowance.

The financial objectives between different investors vary drastically. But in my case, I like to focus on long-term high-growth opportunities. So let’s take a look at two businesses I’m keen to add to my portfolio before the ISA deadline.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Investing in construction automation

The construction industry may seem like an odd place to find high-growth opportunities. But with surging demand for prime warehousing space, courtesy of rapid e-commerce adoption, Somero Enterprises (LSE:SOM) is on fire.

This company design and sells concrete laying screed machines. As dull as that sounds, these devices enable construction crews to become smaller, work faster, and deliver better results.

With labour costs on the rise, the technology is becoming an increasingly popular option. And with the majority of its operations based in the US, Somero is enjoying a pretty substantial tailwind from President Biden’s $1trn infrastructure bill. So it’s no surprise the share price is up over 30% in the last 12 months.

There are, of course, risks. Laying concrete is highly dependent on the weather. If it’s raining, this process isn’t possible as the water compromises the strength of the material. 2019 was a record-breaking year for bad weather, which delayed many construction projects, leading to flat revenue growth. With global warming continuing to worsen, I think it’s likely that weather-related disruptions will occur again in the future.

But with the demand for construction continuing to climb, I feel this is a risk worth taking. That’s why I’m tempted to buy some shares in this business before the ISA deadline next month.

A top growth stock for the ISA deadline

The video game industry continues to grow at a rapid pace. In fact, a report by Fortune Business Insights predicts that the market will grow by 13.2% annually between now and 2028, reaching $546bn (£415bn). Needless to say, that’s a big opportunity for investors. And even more so for Keywords Studios (LSE:KWS).

This company isn’t as well known as development houses such as Activision Blizzard and Electronic Arts. And yet it’s been involved with large quantity of AAA titles released in the last decade. That’s because Keywords is a services business that supplies talent for the entire development pipeline of a game, including programming, 3D & 2D art, player testing, audio design, and even quality assurance.

This approach to doing business has a pretty major advantage. If a newly released title fails to achieve the desired financial performance, the company’s revenue stream is not compromised since its paid either way for its services. But that doesn’t mean it’s completely risk-free.

Becoming the leading support studio in the industry involved a lot of acquisitions over the years. And this aggressive, acquisitive growth strategy continues to be employed today. However, if management starts buying up smaller studios that fail to meet expectations, it could compromise the balance sheet.

So far, Keywords has been prudent in its acquisition targets. That’s why I believe it’s a risk worth taking for my portfolio before the ISA deadline arrives shortly.

The post How I’d invest £20,000 before the ISA deadline appeared first on The Motley Fool UK.

But these aren’t the only growth opportunities on my radar today. Here is another that looks even more promising…

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

Since 2016, annual revenues increased 31%
In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

More reading

2 cheap UK shares that fit Warren Buffett’s investment style
The best Warren Buffett stocks to buy with £250 right now
2 of the best shares to buy in an ISA right now

Zaven Boyrazian owns Keywords Studios and Somero Enterprises, Inc. The Motley Fool UK has recommended Keywords Studios and Somero Enterprises, Inc. 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.





© 2022 The Daily Encrypt. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Latest News