The FTSE 100’s fresh fall last week has created some great dip buying opportunities. But should I buy these UK shares for my Stocks and Shares ISA?
#1: A financial firecracker
I think rising demand for financial services makes Hargreaves Lansdown a brilliant pick for the economic recovery. As corporate profits recover and market confidence recovers, activity across this UK share’s trading platforms is likely to rocket during the new bull market.
There are threats to Hargreaves Lansdown’s profits outlook, however. Interest rate hikes might damage people’s interest in buying shares as fears rise that central bank policy tightening might choke off the economic recovery. It might also feed through to better returns from bank and building society accounts, which could in turn dent demand for the FTSE 100 company’s services.
#2: A high-risk UK share
I’d rather invest in Hargreaves Lansdown than Royal Dutch Shell, however. This is even though the price of crude could rocket over the next few years. Once the economic recovery begins clicking through the gears oil consumption will naturally head northwards too.
I think this UK share still carries too much risk, though. Any demand uptick could be offset by rising supply. For example, production curbs by the influential OPEC group of countries are already beginning to loosen (latest data showed total output from the cartel rise for a seventh straight month in January). And over the long term, Shell and its peers face enormous challenges from the steady migration to green energy sources.
#3: A better FTSE 100 buy?
I’d be happy to load up on ITV stock today, though. This is despite the possibility that the recent recovery in advertising revenues might run out of steam, cutting off the chances of a profits rebound at the broadcaster in 2021 and pulling the share price down again. This UK share might also be forced to shutter production across its television studios if the Covid-19 crisis doesn’t improve.
I’d buy ITV on the back of its exceptional long-term earnings picture. The FTSE 100 broadcaster has invested shedloads in the fast-growing ‘video on demand’ segment in recent years. It has also splashed the cash internally and via acquisitions to transform its ITV Studios arm into a global production powerhouse.
#4: A tasty treat
A UK share that’s high on my Stocks and Shares ISA shopping list is Just Eat Takeaway. Coronavirus lockdowns have naturally lit a fire under the takeout market over the past year. But this is an industry that was already booming before the Covid-19 breakout. And it’s a market that is tipped to keep growing. According to Statista, the global food market will grow at a compound annual growth rate of 6.4% to 2024 and be worth a whopping $182.3bn in the next few years.
I am mindful, though, that at current prices, Just Eat trades on a gigantic forward price-to-earnings (P/E) ratio north of 100 times. This could cause the UK share to collapse in value should trading performance begin to disappoint.
The post FTSE 100 stocks: 3 top UK shares I’d buy for my Stocks and Shares ISA in February! appeared first on The Motley Fool UK.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown, ITV, and Just Eat Takeaway.com N.V. 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