Top 10 ISA investments in June on Freetrade

Top 10 ISA investments in June on Freetrade
Here’s what Freetrade investors have been buying over the past month.
Dan Lane
Published
July 2, 2021 3:37 PM
Updated
July 2, 2021

US stocks still dominate the top 10 investments Freetrade users are buying.

That’s maybe not too big of a surprise to anyone watching the S&P 500 recovery since March 2020 lows. 

And, despite lofty tech valuations making a lot of investors shift in their seat at the start of the year, US stocks have just hit new highs.

The S&P 500 hit a new record level yesterday, ending June in positive territory and giving the index its fifth consecutive monthly rise. 

A blend of lower jobless claims, restored hope of a smooth reopening,  and fears of inflation being pushed aside, at least for now, have boosted enthusiasm for US shares

Let’s see just what our users were stocking up on in their ISAs over the month.

It’s important to highlight that this is a wrap-up, not a suggestion or recommendation that you buy or sell any of the securities mentioned. 

Remember that everyone has their own goals and unique financial circumstances. These, along with your tolerance for investment risk and time horizon, should inform the mix of assets in your portfolio. 

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 first-time investors. And if you are still unsure of how to pick investments, speak to a qualified financial advisor. 


Top 10 ISA investments in June on Freetrade


  1. AMC Entertainment
  2. GameStop
  3. Clover Health
  4. Context Logic (Wish)
  5. BlackBerry
  6. Tesla
  7. Virgin Galactic
  8. Vanguard S&P 500 UCITS ETF (Dist.)
  9. Workhorse Group
  10. Vanguard FTSE All World UCITS ETF (Dist.)


1. AMC Entertainment


It’s 20 years since the first Fast and Furious movie. How on earth are they still going? It’s nearly as if that sweet box office dollar is just too good to turn down.

And, to be fair, raking in $70m on the opening weekend of F9, the newest addition to the saga, probably tells us F10 isn’t too far away either.

Investors in AMC are becoming increasingly buoyed by cinemas opening back up and a backlog of movies, including the new Bond, set to hit the silver screen later this year.

But streaming services have benefited hugely from populations stuck at home. Cinema chains will have to do something special to make sure we see the value in coming back.

It might be that we’re all a bit sick of Netflix and fancy a proper cinematic experience, and with high levels of consumer savings banked over lockdown, there is the potential to get bums on seats again soon.

AMC stock is still one of the poster children of the flight to heavily shorted stocks earlier this year.

But on the ground the firm has been using lockdowns to shore up its cinema portfolio and stay relevant. 

The chain recently raised $230.5m to help it buy new leases and "make investments to enhance the consumer appeal" of its current range of cinemas.


2. GameStop


Meme stock mania has left an indelible mark on this year’s market narrative but, short squeezes aside, why are investors hanging onto GameStop?

One reason might be the hope of a turnaround in light of activist investor Ryan Cohen joining the GameStop board.

Cohen has built up a 13% stake in the company and has made it very clear he wants to transform the video-game retailer into an e-commerce powerhouse.

His focus is on driving digital sales and services, drawing on gamers’ knowledge and relationships with the GameStop brand, but in a manner that minimises heavy costs like store footprints.

A revamped strategy is not necessarily a quick fix to release immense value though. 

Turnarounds can take time no matter who is conducting them and they can take quite a bit of cash to get going. 

That’s why we saw GME sell 5m new shares in June , raising a total of $1.13bn that will go towards shoring up the balance sheet and looking for further growth initiatives.

The share sale comes hot on the heels of April’s $551m capital raise. These new shares hitting the market have taken the shine of a resurgence in the share price in June.

Investors staying in to see the turnaround might just have to get used to a slower ride than they’ve been used to with the stock this year. Allocating capital correctly and making sure Cohen’s plans are on course are two very important elements to keep an eye on now.


3. Clover Health


Is Clover Health recovering?

The Medicare insurance start-up boomed at the start of June thanks to attention from investors keen to dismantle heavy short positions taken following a report by Hindenburg Research.

The activist firm labelled Clover a “broken business” in February, prompting a sell-off in its shares that broadly lasted until the end of May.

But June promised to be a different story, with a spike in price as investors hit back at the shorts.

The jump hasn’t been sustained but shares are still markedly higher than where they were coming into June.

Clover's backer, Chamath Palihapitiya, took the company public through a $3.7bn reverse merger with SPAC Social Capital Hedosophia. After the report came out in February, Clover said it had received a notice of investigation from the Securities and Exchange Commission (SEC) and it intended to cooperate.

Read more:

Top 10 ISA buys in May on Freetrade

Top 10 pension stocks on Freetrade

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4. Context Logic (Wish)


Wish gets a weird reputation. The internet is full of the expectations versus the reality of what the ecommerce platform actually delivers to your door. And, if you’ve ever seen some of the bizarre products they advertise online, the investment case can be a bit of a head scratcher.

But shares got a lift in June after the firm announced a new partnership deal with French platform, PrestaShop.

Wish gained ‘Trusted Partner’ status on PrestaShop and will be given a special landing page on the PrestaShop site. At the same time, the Wish marketplace is now open to the 300,000 merchants and brands already on PrestaShop.

Syncing up the propositions gives PrestaShop sellers access to the Wish merchant dashboard, as well as a suite of marketing and sales support functions.

And if that wasn’t enough, “stronger-than-expected” financial results for Q1 2021 gave investors a bit more cause to sit up and take notice. Revenues were up 75% year-on-year to $772m.

5. BlackBerry


BlackBerry stock got a bump coming into June, driven partly by the Reddit crowd still piling into highly shorted stocks.

It’s come off the boil since then after lacklustre results though. 

Q1 revenues were down around 15% year-on-year to about $174m, slightly better than estimates. 

But a shining light in the results was Internet Of Things software sales. Demand leapt for its vehicle-focused QNX operating system, used in cars, helping software sales to a 48% yearly rise to $43m.

The software is now enabled on over 195m vehicles, a 20m hike from last year.

While the segment business still accounts for a small part of BlackBerry’s overall revenues, the company is backing it to expand amid higher demand for safety-focused software in vehicles, and the transition to electric and autonomous vehicles. 


6. Tesla


Talking of electric vehicles, Tesla is still in the mix of top buys among Freetrade investors.

The stock took a brief dip coming into June but reversed those losses fairly quickly and finished the month higher. 

The talk now seems to be around how much of the EV market share Tesla can hang onto, in light of the likes of Volkswagen, General Motors and Hyundai ramping up their own efforts.

And despite some investors turning to possible short-term opportunities with some of the legacy automakers joining the EV race, that doesn’t necessarily mean they’re set to leapfrog Tesla.

Especially on the autonomous side of things, where data gathering, sharing and analysis are key to producing an ecosystem wherein cars communicate within a network and act according to real-time events.

Tesla has already recorded billions of miles from its vehicles and is arguably in a stronger place to apply that data across its product range.

The real battle is likely to be here, in the data, and might take a team effort from the other big auto names if they are to unseat Tesla - something the likes of Volkswagen has said it is open to.

The stage is set for Tesla vs the world.

In the meantime, Tesla casually reported a new quarterly record of 201,250 deliveries, topping expectations and lifting figures by 121% year-on-year.


7. Virgin Galactic


Space travel is the flavour of the month. We know this because every picture of Jeff Bezos now has him in a blue jumpsuit and aviators like an extra from Top Gun.

And, not to be outdone, Virgin Group founder Richard Branson is looking to spoil the Blue Origin fun with a take-off of his own. 

Shares in Virgin Galactic engaged transmission towards the end of June after the Federal Aviation Administration (FAA) granted the company a license to start taking passengers into space. 

But, with flights currently set to begin in 2022, the initial excitement lost a bit of momentum after the announcement.

A bigger concern for some investors is the 600-strong reservation list which hasn’t budged since 2018. That might point to an inability to take on any more customers because of capacity constraints, which could potentially cap revenues even before the whole thing begins.

Zoom out and, despite the positivity around the FAA approval coming through, there are still big question marks around the overall viability of the business.


8. Vanguard S&P 500 UCITS ETF (Dist.)


Away from individual stock picks, investors are still clearly banking on the ability of the US to come out of the pandemic swinging. 

It has been one of the best performing regions since last year’s pandemic lows, thanks in large part to its thriving tech sector. 

Valuations in the space have largely risen since then so the opportunity for broad market exposure away from that tech concentration might be behind flows into S&P 500 ETFs like VUSA.

Investors have favoured the income-distributing share class here. That can be useful to supplement an income or if you have regular expenses you need help with.

For those eager to rack up dividends over time and reinvest them to take advantage of the power of compounding, an accumulation share class (Acc.) could help.

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.

Dividends are insanely important to the value of total returns.


9. Workhorse


A brand new entrant into the top 10 ISA buy list is electric van maker Workhorse Group.

Shares in the firm got a lift in June on the back of its efforts to challenge its loss of a long-term contract with the US Postal Service (USPS).

The story stretches back to February when the firm failed to win a multibillion-dollar, decade-long contract to manufacture a new generation of postal trucks for the USPS.

The eventual winner of the contract was Oshkosh Defence, which normally designs and manufactures military vehicles and mobility systems.

It was a kick in the teeth for Workhorse, which had already won the support of US lawmakers.

Whether the legal challenge prevails or not, investors are clearly being enticed by the size of the contracts on offer.

Even if the USPS partnership is a lost cause, the market is searching for a firm that can contribute to and benefit from the steady shift towards cleaner energy. Where firms need to upgrade their distribution networks, firms like Workhorse are now very much part of the tender process.


10. Vanguard FTSE All World UCITS ETF (Dist.)


Propping up the top 10 is another ETF, this time in the global sector.

Whether investors are using a core and satellite approach, with core ETFs occupying the bulk of their portfolios and complementing these with a few stock picks, or are solely using broad-based index trackers, ETFs can be a super useful way to invest.

Be careful though. It might say ‘All World’ in the name but the US is such a force in global markets that it makes up nearly 60% of the fund here.

That’s not necessarily a bad thing but if you’re buying a global ETF because you want even global exposure, it’s worth checking under the bonnet to see exactly what you’re getting.

Again, tech is the biggest sector represented, taking up more than 20% of sectoral exposure. If you wanted a less spicy portfolio addition to a tech-heavy portfolio, that might come as a surprise.

Past performance is not a reliable indicator of future returns.

 

Source: FE, as at 1 Jul 2021. Basis: bid-bid in local currency terms with income reinvested.

What's your take on the top 10 ISA buys on Freetrade in June? Let us know on the community forum:


Important Information

This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice.

When you invest, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future results.

Eligibility to invest into an ISA and the value of tax savings depends on personal circumstances and all tax rules may change.

Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales (no. 09797821).

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