Each year, investors like me can add £20,000 to a Stocks and Shares ISA. I think dividing that into 12 lots and investing £1,666 each month is a good way to invest the full amount.
With June just starting, there are a couple of opportunities that I’d look to take advantage of. As usual, one of my ideas is from the UK and the other is from the US.
In the UK, mortgage rates are set to reach around 5% for fixed rate loans. And in the short term, that looks like a headwind for brick manufacturing firms like Forterra.
I think the long-term outlook for the business looks pretty good, though. The company has been using the boom of the last few years to invest in its future production capacity.
As a result, Forterra should be in a position to produce more bricks at lower costs going forward. And there are structural dynamics that also provide a tailwind for the business.
The UK typically has a shortage of bricks produced locally. This means companies like Forterra have a market for their increased output.
On top of this, the business is shielded from rising energy prices – the biggest cost associated with brick manufacturing. This protects the company against a potential short-term issue.
The threat of a cyclical downturn is a genuine risk, but I think this looks like a buying opportunity for the long term. That’s why I’d look to buy the stock in June.
Over in the US, the S&P 500 is up around 10% since the start of the year. But that’s mostly been the result of strong gains in big tech companies.
In other sectors, things haven’t been so strong. Healthcare, financials, and utilities have all seen share prices falling since the start of the year.
For my part, I find healthcare difficult to get a deep insight into and utilities stocks still look expensive to me. That leaves financials as the sector to look at for bargain hunting.
The stock catching my eye is Berkshire Hathaway. At a price-to-book (P/B) of around 1.4, I think the stock is a great buy in June.
There’s an obvious question about what happens when Warren Buffett isn’t in charge any longer. And I think there is a real risk the share price will drop.
Berkshire has much more than Buffett, though. It has enough cash to withstand almost any shocks, some great growth opportunities, and a proven strategy that has stood the test of time.
I’m looking to keep things simple with my investing in June. If I had £1,666 to invest, half of it would go into shares in Forterra, the other half into Berkshire Hathaway stock.
As it is, the sum I’m working with is a bit lower – this month for me is mostly about reinvesting dividends. But both stocks are firmly on my buy list, nonetheless.
The post How I’d invest £1,666 in a Stocks and Shares ISA this June appeared first on The Motley Fool UK.
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Stephen Wright has positions in Berkshire Hathaway and Forterra Plc. 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.