.I’m looking in this article at three FTSE 100 shares that combine fantastic value and growth qualities. These could well be great buys for a Stocks and Shares ISA.
A very cheap global miner
Rio Tinto (LSE: RIO) is one of the world’s leading mining companies. It’s worth over £45bn, even after the recent market declines. Investing in a miner wouldn’t be everyone’s cup of tea. The sector is also highly cyclical so if shares fall further it could be hit harder than most in the short term.
But there are reasons to add it to a Stocks and Shares ISA. These reasons include a price-to-earnings ration below eight on a trailing basis. For now, the company is still scheduled to pay dividends.
The group has been reducing debt, which has put it in a better position than it was last time commodity prices fell.
China a major consumer of iron ore, which is Rio’s main product. As China is seemingly recovering from coronavirus, demand might not dry up to quite the extent which might have been expected just a few weeks ago.
Barclays (LSE: BARC) shares are offering a fantastic combination of value and growth potential. But first it has to come through this current crisis which has forced it to scrap its dividend, along with other banks.
Given the banks have been building up capital in recent years it’s doubtful this will be a problem, provided COVID-19 doesn’t shut down the economy completely.
Assuming the economy bounces back this year, the shares at a P/E below five are incredibly cheap. It’s hard to remember a time Barclays had a P/E anywhere near this low. Indeed, the shares at 10-year lows. That’s despite Barclays performing well financially before the virus hit. In 2019 it made £4.4bn of pre-tax profit.
Its diversification, as both a retail and investment bank, should also help see it through these rocky times where interest rates have been slashed and debt is rising. I think it’s a good one for the ISA.
The value trust that’s gone defensive
The manager of investment trust Scottish Investment Trust (LSE: SCIN) has reacted quickly to the changes brought about by coronavirus. Last month he sold a number of consumer stocks, retailers, banks and oil services companies – including Gap, Macy’s, M&S, and banks ING and BNP Paribas.
The trust owns a number of overseas stocks. In the top 10 holdings from the UK are defensive, lowly valued shares such as Tesco, BT, and United Utilities.
The trust has £100m of borrowings it will use to scoop up other shares it wants to own.
It remains to be seen whether the strategy of shifting the portfolio to meet the challenge posed by COVID-19 will work well for the trust’s investors. But it’s trading at a discount to its true value. It also has a great record of paying out dividends to shareholders. With dividends being cut left, right, and centre, it’s a share I’d want to pop in an ISA.
The post Forget buy-to-let! Here’s 3 FTSE 100 shares I’d buy for a Stocks and Shares ISA appeared first on The Motley Fool UK.
- Forget gold and Cash ISAs. I’d buy crashing FTSE 100 stocks to get rich and retire early
- Forget Bitcoin! I reckon there’s a big opportunity in the stock market right now
- How I’d invest £2k in this FTSE 100 stock market crash
- This FTSE 100 share price has fallen by over 33%. I’m buying and here's why
- The Lloyds Bank share price is at its lowest since 2012! Here’s what I’m doing now
- Top shares for 2020
Andy Ross owns shares in Scottish Investment Trust. The Motley Fool UK has recommended Barclays. 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 2020