A Stocks and Shares ISA is a great vehicle for both medium-term and long-term investing. It allows all investments within the account to grow free from capital gains and income tax.
Unsurprisingly I have found the use of this type of ISA very appealing, and consequently have looked for new shares to include. I tend to focus primarily on long-term investing, looking for good value companies with strong fundamentals.
Greggs
The first share on my list is Greggs. A retail bakery powerhouse that has dominated the high street, with over 2,000 locations. After a strong 2021, the company has struggled over the past year, falling 45%.
Despite this, the underlying fundamentals are encouraging. The company has considerable profit margins, minimal levels of debt, and a high level of cash generation. Furthermore, the company is fairly valued, with a price-to-earnings ratio of just over 16.
However, given the long-term nature of this potential investment, it’s important to consider future earnings performance. During tough market conditions, dividends were halted, potentially indicating that this could happen again if similar conditions arise.
Nonetheless, I believe that the company still represents a good long-term investment opportunity. I would add this share to my Stocks and Shares ISA.
Ashtead Group
The second company on my list is Ashtead Group, a construction equipment rental giant. It operates in three main regions — the US, Canada, and the UK — with over 1,000 rental locations worldwide.
Ashtead had an extremely strong recovery in 2020 and 2021, rising over 300% from its pandemic low. Despite this, the company has struggled with share price momentum in 2022, falling 35.6%. Recently, debt levels have begun to increase, and cash generation has fallen below its three-year average.
However, I am still encouraged by many of the underlying fundamentals. The company has strong profit margins, efficient earnings generation from capital, and a consistent dividend history.
Therefore, I would still add Ashtead Group to my Stocks and Shares ISA, with the goal of long-term share price growth, and dividend income.
JD Wetherspoon
The final share on my list is JD Wetherspoon, a staple of the British high street. The company operates close to 1,000 pubs throughout the UK, along with a selection of hotel locations.
Unsurprisingly the last few years have not been kind to the company. The share price fell 51.4% in 2022 and is down 73.1% from pre-pandemic levels.
I have always been fond of J D Wetherspoon, and believe its continued domination of the high street to be a good sign. Furthermore, pubs are no longer shut due to Covid-19, and underlying sales have reached pre-pandemic levels.
However, it needs to be mentioned that the pandemic has made a significant impact on the company. Debt levels have soared, and profit margins are suffering from the recent rises in product and labour costs.
Despite this, I still do consider J D Wetherspoon to be a good quality company that is now trading at a discount. Therefore I am tempted to add this share to my Stocks and Shares ISA.