3 Last Minute ISA Stock Picks

Still looking for last minute ISA investment ideas? Three top-performing fund managers each pick a stock for you to consider adding to your ISA portfolio

External Writer 30 March, 2016 | 9:48AM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. 

Looking for some last minute ISA stock ideas? Three top-performing UK and European equity fund managers pick a company for you to consider – and explain why they chose that stock.

Diageo (DGE)

Picked by Hugh Yarrow, Evenlode Income

A long-held stock within the portfolio, Diageo is a leader in the alcoholic drinks market with a portfolio of strong brands such as Johnnie Walker, Guinness and Baileys. It also has a well-balanced portfolio in terms of exposure to developed and emerging markets. 

The last few years have been tough in terms of operational performance as emerging market growth has slowed. As a result, shares have under-performed and the stock offers a dividend yield of 3.4% – well supported by free cash flow.

In our view, the long-term potential for dividend growth is strong, the most recent dividend increase was more than 5%. In the near-term, there are also some positive dynamics at play. Diageo’s US sales performance is improving and the recent fall in oil should provide a tailwind for US consumption growth. The US market represents more than 40% of its profit.

Pandora (PNDORA)

Picked by Nicolas Walewski, Alken European Opportunities

We are bullish on Danish international jewellery maker Pandora. We visited Pandora’s operations in Thailand last month and its outlook is extremely strong, with growth fuelled by online and expansion into new categories. Pandora has been successfully focussing its energy on Europe and the US, while continued expansion in Asia will accelerate its growth even further. Pandora has 19 stores in Singapore and 40 in China, which puts into context the huge growth opportunity for the company. In fact, Hong Kong is one of its most profitable franchises.

Pandora has one of the cheapest price/earnings to growth ratios in European equity markets. This stock trades on about 15x earnings, with a growth rate above 30% – which is incredibly impressive. It is one of our top holdings in our funds.

Orange (ORA)

Picked by Stuart Mitchell, SWMC European

For years we have been intrigued by the strength of Orange’s franchise. The outlook for the group appears to be improving in a number of important ways. Management is working hard to reduce costs, but perhaps more importantly, European regulators have begun to acknowledge the industry has been weakened by fragmentation that long-term investment has been undermined.

Notably, 4G investment is said to be three years behind the US. The regulatory burden is consequently easing somewhat, while at the same time the process of consolidation has begun to accelerate.

Disclaimer
The views contained herein are those of the author(s) and not necessarily those of Morningstar. If you are interested in Morningstar featuring your content on our website, please email submissions to UKEditorial@morningstar.com

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Alken European Opportunities R340.80 EUR-0.72Rating
Diageo PLC2,504.50 GBX-0.83Rating
Orange SA9.44 EUR-0.30Rating
Pandora A/S1,274.50 DKK0.87Rating

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