2020 is turning out to be a great year for those looking for FTSE 100 shares for their Stocks and Shares ISA. Especially newcomers, who aren’t suffering any falls from last year. But either way, for long-term investors a stock market dip can provide some cheap buys.
Today I’m looking at two FTSE 100 shares that took a hammering when the pandemic arrived. They’ve both rebounded strongly in the past month, and I’m eyeing them up for my list of potential buys.
My first Stocks and Shares ISA candidate is British Land (LSE: BLND), which just released first-half results. The British Land share price was one of the biggest fallers in the early part of the crash, rapidly falling 50%. But now that news of Covid-19 vaccine progress seems to be arriving almost daily, it’s put in one of the most impressive rebounds. British Land shares are up 30% so far in November.
Liquidity fine, shares on a discount
But for it to be a Stocks and Shares ISA choice for me, I’d have to be convinced by the firm’s long-term potential. And these first-half figures go some way towards that, even if they’re not immediately pretty. With its tenants, especially retail ones, under pandemic pressure, British Land has seen its underlying EPS fall by 34.8%. That’s due, not surprisingly, to a rise in provisions for rent receivables.
Its portfolio valuation has fallen too, by 7.3%. Retail properties took the brunt, down 14.9%. And net tangible assets declined 10.3% to 693p per share. But, wait a minute, the shares are trading at just 495p. So that’s a discount to net tangible assets of nearly 30%. Liquidity looks fine, with the firm selling £456m in retail assets since April — at 6.7% above book value.
British Land is paying an interim dividend of 8.4p per share, so analysts’ full-year expectations could prove too pessimistic. They’re predicting a return to a 4% yield next year anyway. Yes, British Land is firmly on my Stocks and Shares ISA list.
Another Stocks and Shares ISA pick
My second pick is in the property business too. It’s Barratt Developments (LSE: BDEV), whose shares are also rebounding strongly. The price was already picking up, and November has brought an extra 35% hike.
The Barratt Developments share price is now down just 10% in 2020, having bounced back above the FTSE 100. The lack of 2020 dividend has discouraged a lot of investors, and we’re expecting a big earnings fall for Barratt this year. But the housebuilding business can be cyclical. And I invest in a Stocks and Shares ISA for the long term, which means I’m happy to sit out short-term ups and downs.
I reckon Barratt has one of the most rock-solid long-term prospects there is. We’re still facing a chronic housing shortage, and the 2020 slowdown is surely just a pause in demand that won’t last.
Forecasts suggest a big earnings rebound for 2021–21. And there’s already a 3.4% dividend yield penciled in. I hold Persimmon shares, but Barratt could well be joining them in my Stocks and Shares ISA.