Highlighting five shares that could plump up your ISA.
Five top share tips for your ISA
IG Design Group
This is an AIM-listed company which produces a wide range of products related to celebrations and creative play, from birthday cards to branded bags and gift wrap. It is growing strongly and has a wide international presence, which means that overseas revenue now accounts for 70% of sales. The acquisition of a significant business in the US last year provides the company with a good platform for growth in what is a major market. Naturally it also faces some competition there, and the uncertain economic outlook in the UK is also potentially a headwind, but the long term track record is a good one.
In uncertain economic times companies which provide essential services around the world and have steady cash flows become very appealing to investors. Catering group Compass is one such and has enjoyed steady growth in its main North American region for some time. A recent trading update reiterated the good underlying performance and the company raised its full-year sales guidance. The 2.5% prospective dividend yield is below average but payments are well covered and expected to grow above inflation. The long term trend towards outsourcing catering needs is well established and should deliver further growth, but we would advise that investors drip-feed into the stock.
Medium to high risk
We have long been fans of the group and the attractions of the company and its aims of 'buy, improve, sell'. The model it operates of an engineering buyout firm makes Melrose a quoted private equity-type investment. The management has many years’ experience and success in the engineering field. The focus has now moved to the 2018 acquisition of GKN and management's plans to improve the business and potentially sell parts of it. Analysts believe GKN will be a longer-term turnaround story. NB Results due 7 March
Low to medium risk
The world's largest credit data group has expanded the range of industries that it services, and introduced new digital products in areas such as fraud, health and analytics. There has been a consistent rise in organic sales growth and the important North American business continues to be their stand-out performer. Other attractions include steady returns, strong cash flow and margins, limited concerns over competition and a diversification strategy. There is a feeling that as a result of the past banking crisis and economic problems, there will only be more demands for its service.
Many analysts had expected that 2018 would be a year of revenue turnaround for the group who have had to contend with generic competition for so many years. And the signs of a turnaround certainly showed up in the second half numbers for the group. Some key new products doubled their sales during the year and from now on should more than offset the slide in sales of past blockbuster drugs. Growth hasn’t just come from new drugs but also the group’s focus on expanding into emerging markets, specifically China. The management say they’ve made extensive preparations for Brexit, but the company should be relatively immune anyway given its multinational and defensive nature. This is an income idea for investors willing to accept a lower level of risk.
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