The Stocks and Shares ISA is a powerful vehicle for our investments. It shields our earnings from capital gains and dividends from tax. In fact, over 95% of my non-pension investments are in an ISA. Essentially, I only invest outside the ISA when my allowance has run out.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
So what if I were starting a Stocks and Shares ISA today? Well, if possible, I’d want to build a diverse portfolio of stocks.
Although it’s worth considering how much our brokerages charge before build a portfolio. For example, given Hargreaves Lansdown‘s fee, I don’t tend to invest less than £1,000 in a single stock.
However, if I were investing through a cheaper platform, that would be less of a concern. In turn, this could make it easier to have diverse portfolio of holdings.
So here are two stocks I’d consider buying as part of a broad ISA portfolio.
GigaCloud Technology
GigaCloud Technology (NASDAQ:GCT) wouldn’t be the first stock on most people’s lists but I just can’t ignore the value here. The company essentially connects furniture manufacturers in China with markets in North America and Europe, and then provides the logistics solutions.
It’s a unique business that responds to the challenge of storing unsold large parcel goods in the country of sale — just think about how big a warehouse must be to hold 500 sofas. So GigaCloud connects the makers with buyers.
Investors might be concerned then about the impact of shipping disruption around the world, but GigaCloud recently said it’s having only a limited impact. That’s because its main markets are in North America.
On a valuation perspective, GigaCloud is trading at 11.1 times earnings for the year ahead, 9.5 times earnings for 2025, and 6.9 times for 2026. That’s incredibly cheap for a company on such an exciting growth trajectory.
Li Auto
Li Auto (NASDAQ:LI) is another Chinese company on my list. The stock fell last week after the company downgraded its own production figures for Q1, citing lower-than-expected order intake and operational issues with its star model Li Auto Mega.
This is a very different narrative to the one we’ve been getting over the last year during which Li blew all of its competitors away. In the fourth quarter alone, deliveries reached 131,805, reflecting a substantial 184.6% year-over-year surge.
But despite this dip in Q1, I have faith that the firm will come back stronger. It’s developed a great niche by focusing on EREV (Extended Range Electric Vehicles), and has just entered the BEV (Battery Electric Vehicle) market with an all-singing-all-dancing seven-seater.
It’s currently trading around 17 times forward earnings — that’s taking into account lower sales in Q1 — and has a price-to-earnings-to-growth ratio around 0.8. In the current market, it’s very cheap, and I’m excited to see what happens when it starts tapping overseas markets.
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James Fox has positions in GigaCloud Technology Inc. and Li Auto Inc.. The Motley Fool UK has no position in any of the shares mentioned. 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.
