Top 10 stocks and shares ISA investments on Freetrade
With the start of a new tax year fast approaching, we look at what people have been buying with their annual allowance over the past 12 months.
Published
September 4, 2024
2021 was a year for breaking records. The highest sandcastle (a whole 69 feet of it), tallest woman (7 feet tall and 0.7 inches), and most ever Freetrade ISA transactions - just to name a few of the big ones.
It's easy to see why stocks and shares ISAs were so popular with Freetrade users. For starters, you can use your account to invest in a wide range of investments - which is great for your ability to diversify.
Plus, stocks and shares ISAs offer the ability to buy and sell shares without having to pay UK capital gains tax.
Though stocks and shares ISAs aren't the only ISA in town.
For instance, if you intend to use your ISA just to hold cash, a cash ISA may be more suitable for your needs. For a full walkthrough on ISAs, you can check our guides on what is a stocks and shares ISA, or ISA rules.
Now that the end of the tax year is upon us, your annual ISA allowances will soon renew. This marks a great opportunity to take stock of what your stocks and shares ISA account currently holds.
It's also a nice excuse to take a stroll down memory lane and check out the 10 most popular ISA stocks on Freetrade for last year.
Before we do, keep in mind that everyone has their own goals and unique financial circumstances. Also, eligibility to invest into an ISA and the value of tax savings depends on personal circumstances and all tax rules may change
Your objectives, time horizon and your tolerance for investment risk should inform the mix of assets in your portfolio. Remember that when you invest, you're putting your capital at risk.
That's one of many reasons it's never a good idea to rely on one individual stock. As an investor, your financial goals will help you determine the range of stocks suitable for your needs.
This is by no means a list of what shares to buy now and these are not necessarily the best stocks to invest in. As past performance is no indicator of future returns, and this list is inherently backwards-looking, none of this should be taken as a recommendation to buy or sell shares.
Our resource hub for investing in the stock market might be able to help make that blend a bit clearer for you and our guide on how to invest in stocks is a great start for newbie investors. If you are still unsure of how to pick investments, speak to a qualified financial advisor.
Ah, Tesla. Just one look at its share price trajectory last year shows how popular an investment it was.
By November, the firm had doubled its market value.
The EV maker also managed to squash whispers of worry over supply chain conundrums in the leadup to its Q4 results. As reported by FactSet, Tesla ultimately delivered 40,000 more electric vehicles (EVs) than analysts expected.
Still, the road ahead isn't exactly paved with glitter and gold. Ford's share price cruised through a 20-year high earlier this month after announcing it would double its electric F-150 Lightning truck production. That should bring its annual production up to 150,000 EVs by 2023.
Musk shipped off a total of 308,000 vehicles in 2021. While that's clearly leaps and bounds above Ford's current EV capacity, the fact is, Ford might benefit from its significantly more diversified product range. It also has a wider array of assembly line locations than Tesla, especially on this side of the pond, where Tesla's been a little more lacklustre.
Even with audience numbers well below half of their pre-Coronavirus pandemic levels, AMC's share price still managed significant growth last year. I mean really. Have you ever tried reclining in those fold-down chairs?
In its most recent Q3 earnings, AMC's revenue hit $763.2m - a fair chunk better than analysts' expectations of $708.3m
The firm is still operating at a loss, though. And depending on your stance as to what's next for the entertainment industry, it may be a while still until they manage to turn that around.
Thanks to the COVID-19 pandemic, the at-home streamers were able to really step their game up. It'll be increasingly hard to get movie-goers back in the door when they could just hit the couch for a cheaper, dare I say, more comfortable viewing experience.
Or at least, that's what AMC's revenue seems to be indicating lately.
GameStop kicked off the year with a rumour-mill extravaganza. Allegedly, the firm is dabbling in its own NFT-marketplace with intentions to build out a fleet of NFT-enabled games.
The headlines gave its share price a little skip in its step. But its share price has long been characterised by peaks and valleys, something investors in the stock are all too familiar with.
This is the perfect opportunity to reiterate that none of the companies on this list are official recommendations. They are simply some of last year's most popular buys on the Freetrade app.
Don't forget, as a rule of thumb, past performance is not an indicator of future returns. It's important you not only consider a stock's performance in isolation but how it relates to your full portfolio and overall investment goals too.
That can mean going beyond what the news is saying, and performing some fundamental analysis of your own.
In the case of GME, that means looking at the hype-driven volatility through both a short and long-term lens and situating its most recent history along a much longer timeline.
💡 Learn more:
How to buy stocks
ISA vs GIA - which is best?
What is commission-free trading?
Here come the tech stocks.
Apple started 2022 with a boom, smashing a $3tn market cap to ring in the new year. It transformed from one of the world's biggest companies to the biggest of them all.
Though Tim Cooke's pat on the back was somewhat short-lived given the slight share price decline it has witnessed since.
One key reason for Apple's growing success could be its ability to cut reliance on iPhone sales.
While these were once its bread and butter, Apple's managed to diversify its revenue streams. It’s managed to cut the iPhone’s share of its revenue by 8% since 2018, all while growing the segment’s sales by 49.7% in the last year alone.
All this goes to show that adding new revenue streams hasn’t harmed Apple’s existing ones.
The firm’s services segment really goes to show it, with Q3 revenue of $14.5bn marking a 32.9% increase on the year prior.
Over-reliance on any one customer or product is never a great thing for a business, let alone you, the investor. If Apple can keep increasing net sales across its slew of products and divisions, while decreasing reliance on any of them, that’s good news for the diversification of its revenue.
This time last year, Palantir's share price was at an all-time high. The firm is essentially a data collection company, offering up its insights to commercial and government segments.
In Q3 2021, Palantir closed a total of 54 deals, 18 of which were valued at over $10m a pop. It was a record-breaking quarter for the firm, pulling in 44% year-over-year revenue growth up to $1.1bn.
The firm’s also inched closer toward profitability. In Q3 of 2020, its net loss was $853m. By Q3 of last year, it was sitting at $102m, marking an 88% improvement.
Though its dependence on the US market seems to have raised some red flags about its potential for future growth. Palantir is very reliant on the US government as its main client. If it’s unable to scale its solutions outside of the Land of the Free, then these growth levels might be much harder to achieve.
After all, Palantir's share price has more or less been falling ever since its latest earnings statement, which may just go to show it was over-valued after its meme-stock moment earlier in 2021.
"When confronted with the choice between optimising for short-term profits versus what’s best for customers over the long term, we will choose the latter".
Words of wisdom from Amazon CEO, Andy Jassy.
Whether or not you believe that’s really how conversations went down in the Amazon boardroom, you can rest assured the firm profited boatloads off the pandemic.
Doubling its fulfilment network since Covid began, Amazon took its ubiquitous nature to new heights.
Though this year, things are looking less rosy. So far, Amazon's share price has tumbled.
It would be easy to say it’s just been hit by a general tech selloff, but two consecutive quarters of missing analyst revenue expectations have weighed on the share price as well.
And it seems unlikely that lockdowns lifting and Covid restrictions easing will be any help to the digital behemoth.
The S&P 500 was on a tear last year.
The US seemed to bounce right out of any pandemic-related concerns quite quickly and the companies set up to serve us over lockdowns shone. Valuations looked perky across the region, and nowhere was that more obvious than in the land of tech.
But with a tech selloff marking the start of 2022, there's no guarantee the S&P 500's growth will keep chugging along.
Apple, Microsoft, Alphabet, Amazon, and Facebook now make up 23% of the S&P 500, according to S&P Dow Jones Indices. That's a whole lot of tech stocks in one place, and it might mean holders are slightly less diversified than they first thought.
None of this is to say the US is a hardline sell - it’s tough to bet against the world’s biggest market at the best of times.
According to Hartford Funds, an initial $10,000 invested in the S&P 500 over the 60 years from 1960 to 2020 would have grown to $627,161 in price terms, or $3,845,730 with dividends reinvested.
But it's important to understand exactly what you're investing in when you're considering an index-tracking ETF. Even though the S&P 500 is a massive index, that by no means indicates industries are weighted evenly across the board.
And, if 2022 is characterised by a flight from the lockdown beneficiaries, it could be all about active stock selection rather than broad market exposure.
As the technological backbone behind NFTs, blockchain got a lot more eyeballs last year. So too did any company that seemingly had to do with the technology.
But it's the driving force behind a lot more than a digital JPEG of a cat flying to the moon on a lollipop.
Spending on blockchain solutions is forecast to hit $11.7bn this year, mostly in identity management (to store and verify information about employee and customer data) and other cybersecurity purposes.
But for the most part, Argo's business is in Bitcoin mining. And while the price of crypto is currently at a lull relative to its highs last year, Argo's going guns blazing to maximise its mining capacity.
It's set to build a 200-megawatt mining facility this year at a 320-acre plot in Texas. That will give it a major leg up in production capacity - up to 10x what it's currently producing, to be exact.
Although its operations span North America and the firm is NASDAQ listed, you can also find it on the London Stock Exchange - making it the only British stock on the list.
Microsoft continually reported better-than-anticipated results last year, which is noteworthy for a company with the age and size it already has.
The firm has churned out higher revenue across a slew of business segments for decades. Gaming was historically its most sluggish division, but its latest announcement of intent to acquire Activision Blizzard might just turn that around too.
Still, in case you needed more evidence of the shift away from tech stocks, not even Microsoft's pending $68.7bn acquisition gave its share price much of an uptick.
That may be due to ongoing concerns over unfair competition, warning the deal might not actually go through. While historically, Alphabet and Meta have been on the receiving ends of such accusations, this might now be Microsoft's turn to take the antitrust centre stage.
Compared to its fellow tech titans, Alphabet managed the greatest share price growth last year (vs. Microsoft, Apple, Meta and Amazon), even beating out the number one on this list, Tesla.
Largely, that was thanks to massive revenue growth from Google's advertising arm. With the pandemic-induced shift in favour of online shopping, it wasn't just digital retailers poised to benefit. Google, the world's biggest online advertiser, was reeling in the page clicks and views.
Advertising revenue makes up the majority of Alphabet’s revenue. In its Q3 earnings, the firm reported $53.1bn from Google Search, YouTube ads, and other Google Network advertising. That was a 43.1% increase on 2020’s $37.1bn.
Meanwhile, Google’s Cloud services earned around $4.9bn.
So it’s by and large the reason Alphabet actually has a relatively low price to earnings (PE) ratio up against most of the other tech firms on this list. PE measures a firm’s current share price relative to its earnings per share (EPS).
At 26.1, Alphabet is much lower than 55.8 over at Amazon, and still slightly under Apple’s PE of 28.9 and 33.1 for Microsoft.
Say what you will about the search engine that knows what you’re thinking before you do. If clicks are any indication, what it did last year will feasibly still pull in good revenue this year too.
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