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2 of the best FTSE 100 shares to buy in a Stocks and Shares ISA in 2021

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Matthew Dumigan
·3-min read
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macro shot of computer monitor with FTSE 100 stock market data in trading application
macro shot of computer monitor with FTSE 100 stock market data in trading application

With the end of the tax year fast approaching, I’ve been thinking about some of the best FTSE 100 shares I could buy inside a Stocks and Shares ISA for the remainder of 2021 and beyond.

Two companies that immediately sprang to mind were index titans Unilever (LSE: ULVR) and Diageo (LSE: DGE). Both are in the top five largest companies by market capitalisation within the FTSE 100 index.

With that in mind, here’s a closer look at why I think they’re among the best UK shares to buy for my investment ISA.

A global reach and much-loved brands

First up, I’m going to discuss Unilever. The multinational consumer goods company is a real industry giant. In fact, its many brands are household names across the world.

It wouldn’t be going too far to say that Unilever has a truly global reach, which is a quality that has enabled the company to weather the pandemic storm reasonably well over the past year.

Furthermore, exposure to hygiene products and in-home foods helped offset weaker sales growth in beauty and personal care products throughout last year. This resulted in a 1.9% increase in full-year underlying sales.

However, there are tangible risks ahead for the company to navigate. For instance, as long as lockdown restrictions remain in place, sluggish sales growth in the sectors that rely on the economy opening up will hold back the group’s potential.

Furthermore, it’s possible that the rising presence of smaller brands and cheaper own-brand options could threaten growth over the long term, potentially weakening the loyalty of Unilever’s consumer base.

Nevertheless, I’m confident that the sheer size and reach of Unilever will be enough to ensure the group can reaffirm its position as a market leader.

Not to mention the growth prospects arising from the company’s business rejuvenation, which will include the sale of the tea business in developed markets.

Thus, for the time being, my focus is on whether or not Unilever can achieve an attractive level of growth over the long term.

What’s more, since I believe the potential benefits outweigh the risks, I’m confident Unilever is one of the best FTSE 100 shares I could add to my Investment ISA today.

Emerging markets exposure

The second company I’d buy inside a Stocks and Shares ISA is multinational alcoholic beverages business Diageo.

After a rough period throughout the pandemic, I’m confident that the rising prospects of relaxed lockdown restrictions and the reopening of the economy at home spell good news for the group.

After all, the likely boom of the hospitality business will certainly benefit Diageo’s share price.

However, it won’t be plain sailing. The group carries a substantial amount of debt, which poses a tangible risk if future lockdowns remain a possibility. Furthermore, performance in developed markets has been lacklustre in recent years.

That said, increased exposure to the growing middle classes within emerging markets could prove to be a catalyst for further growth if developed markets become less lucrative.

Ultimately, with big brand names such as Gordon’s, Guinness and Johnnie Walker, I think Diageo is well-positioned to stage a strong post-pandemic recovery.

In my eyes, it ranks alongside Unilever as one of the best FTSE 100 shares I could buy today.

The post 2 of the best FTSE 100 shares to buy in a Stocks and Shares ISA in 2021 appeared first on The Motley Fool UK.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2021