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.