My Stocks and Shares ISA is a great way for me to invest in a tax-efficient manner. With an allowance of £20,000 per year, these investments are immune from capital gains tax. With a market recovery seemingly in progress, here are two companies I’ll be adding soon. Let’s take a closer look.
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.
Clear for take off?
Wizz Air (LSE:WIZZ) shares are down 15% in the last three months and currently trade at 2,463p.
It’s clear from the monthly updates provided by the short-haul airline that passenger numbers are recovering at pace. In July, for instance, the firm flew 4.76m passengers. This marked an increase of 61.1% year on year (yoy).
Furthermore, it flew 4.34m customers in June and this was a 179% yoy increase. Despite this, investment bank Berenberg lowered its price target from 3,300p to 3,200p, because cancellations had caused Wizz Air’s recovery to slow down.
In addition, the company reported a loss of €285m for the three months to 30 June. This was mainly due to higher jet fuel costs.
On the flip side, revenue over this period rose by 300% yoy, to over €800m. It also carried in excess of 12m passengers during this time, which compares to just under 3m for the same period in 2021.
As a potential investor, it’s also promising to see that the business has an increased cash balance of €1.58bn. This may help it weather any short-term storms that come its way.
Calmer seas?
Second, TUI (LSE:TUI) was battered during the pandemic and the shares are down 27% in the past three months. At the time of writing, they’re trading at 146p.
For the three months to 30 June, the company – a leisure and travel firm – reported that group losses shrank from €939m to €331m. It was interesting to note that the cruise and hotels segments returned to profit during this time.
In addition, the business confirmed that debt had been reduced by around 50%. It also appears that the summer months will reach pre-pandemic booking levels, suggesting that a recovery is in progress.
However, there is the threat that further pandemic variants arise, and this could negatively impact the company. Investment firm AJ Bell also worries that some consumers will be unable to afford holidays due to the cost-of-living crisis.
Despite this, the relaxation of restrictions generally means it will be easier to travel in the future. Over the long term, this could help TUI to return to profit.
Overall, both of these businesses have suffered during the pandemic. With share prices at low levels, I think they could be good additions to my Stocks and Shares ISA. To that end, I’ll buy shares in each company soon to hold for the long term.