I would start a stocks and shares ISA, targeting investments that have the potential for growth.
But I also need a reasonable valuation and strong operating momentum right now.
Is there really that much to ask of a company? Probably, but based on these requirements some UK stocks look attractive at the moment.
My watchlist categorizes and rates them. Now let’s talk about the companies currently occupying the top positions.
Increase in production
February, UK-based gold producer pan african resources (LSE: PAF) has announced strong half-year results for the six months to 31 December 2023.
The company is making good progress in developing mining and exploration activities in Africa. Compared to the previous year’s performance, gold production increased by 6.7%.
Increased production now is a good idea, as gold prices have been high through most of 2024. Fortunately, the company expects more production this year and into the future.
Citi analysts expect normalized profits to rise by about 32% in the current trading year to June 2024, and 19% next year. Higher gold prices lead to improved cash flows and profits for companies.
Stock prices are responding well to improving trading conditions.
A major risk for shareholders is related to fluctuations in commodity prices. If the price of gold declines, Pan African Resources will not be able to earn as much profit from the gold it produces, and its earnings may be lower than expected, which could cause its stock price to decline.
You can expect a large dividend yield
Nevertheless, CEO Corvus Roots said the business “Good location” To achieve our current fiscal year 2024 operational and strategic objectives.
The share price was around 22.24p (4 April), giving it a projected dividend yield of almost 5% for the trading year to June 2025. On the other hand, the balance sheet looks very healthy, with a moderate level of net debt.
This is important in a cyclical outfit like this. When trading is good, this type of company should reduce debt and conserve cash for the next downturn.
However, Pan African has a pipeline of opportunities to further develop its production in the coming years. I think it’s a good time to look deeper into the company’s operations.
If investors are comfortable with volatility, the shares can be a useful addition to a portfolio of diversified positions in a shares ISA. After doing thorough research, I aim to buy a few shares of the company on short-term down days or decline days.
One important indicator to monitor is the price of gold. If it pulls back a bit from its recent highs, Pan Africa’s share price could follow suit. Such short-term price movements can be a more valuable entry point for investors focused on longer-term timescales.
The post 1 Top Investments to Consider Now to Start a Stocks ISA appeared first on The Motley Fool UK.
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Kevin Godbold has no position in any stocks mentioned. The Motley Fool UK has no position in any stocks mentioned. The views expressed on the companies mentioned in this article are those of the writer and may differ from official recommendations we make on subscription services such as Share Advisor, Hidden Winners, or Pro. At The Motley Fool, we believe that considering diverse insights makes us better investors.
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