Top 10 stocks and shares ISA buys in July on Freetrade

Top 10 stocks and shares ISA buys in July on Freetrade
Which UK & US stocks have Freetrade investors been buying over the past month?
Dan Lane
Published
August 2, 2021
Updated
September 16, 2021

US stocks are still top of the pile of the most popular investments Freetrade users are buying.

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

The index is now up over 90% since its lowest point last year and has led the global stock market recovery with its big tech names.

And, despite recent inflation figures making a lot of investors shift in their seats, earnings seem to be supporting the US tech trade for now.

Let’s see what Freetrade users were stocking up on in their stocks and shares 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 July on Freetrade


  1. AMC Entertainment
  2. Wise
  3. GameStop
  4. Virgin Galactic
  5. Tesla
  6. Vanguard S&P 500 UCITS ETF (Dist.)
  7. Vanguard S&P 500 UCITS ETF USD (Acc.)
  8. Amazon
  9. Apple
  10. Alibaba

1. AMC Entertainment


AMC got a huge boost coming into June as investors spied a huge opportunity for the chain, thanks to cinemas opening back up.

A backlog of movies, including the new Bond which is set to hit the silver screen later this year, prompted a wave of buying and a hike in share price.

But July was a different story.

The company said it was doing away with plans to issue up to 25m new shares, which could have raised more than $1bn, after feedback from investors. That’s an incredibly important line to draw because of the debt the firm is shouldering. 

AMC came into the pandemic owing more than $4.5bn and more than $450m in deferred lease payments, so tapping shareholders for enough money to tackle it has been a key strategy.

The chain had already raised $1.3bn between April and June in part to help it buy new leases and "make investments to enhance the consumer appeal" of its current range of cinemas.

But, on the whole, investors’ enthusiasm might have been tested by the constant share dilution. After rocketing in June, the share price made a gradual move south last month. 

It’s a tricky balance to get right. AMC clearly wants to keep shareholders onside but the company knows that level of debt simply isn’t good for anyone involved.

It might have been one of the poster children of the flight to heavily shorted stocks earlier this year but investors hanging in for a more sustained turnaround might have to put up with a bit more dilution in the short term, just to keep the lights on.

Shoring up the balance sheet while the company still has the attention of the market is paramount. Only then can it really start to get back on its feet.


2. Wise


The artist formerly known as TransferWise is the latest firm the UK is holding up in an effort to let the world know it loves tech.

The money transfer firm came to the UK main market in early July with a £8.8bn direct listing, making it the largest-ever public debut for a UK tech company.

Wise wants to transform the way we send money abroad by getting rid of the fees added on by the banks and services in the middle of the transaction.

The listing boosted the firm’s valuation, which stood at £3.5bn after a funding round in July last year.

The company currently has 10m users and has turned a profit for the past four years. Pre-tax profits shot up to £41m in 2020 as it made a big effort to muscle in on the £54bn in remittances sent elsewhere last year.


3. GameStop


Meme stock mania seems like a lifetime ago now. The whole saga burned with a brief but fierce light earlier this year but, short squeezes aside, why are investors hanging onto GameStop?

The big hope is chairman Ryan Cohen’s plans to make the firm into the “Amazon of gaming”. 

But just how possible is that objective? 

Shifting models from the place gamers traded in their back catalogue of PS1 games, to an online-first ecommerce platform will take time and money. And, with Netflix announcing its foray into the gaming world, the space is looking increasingly crowded.

The first step for the turnaround plans seems to be in place though. GameStop recently said it had managed to pay off its long-term debt and its Q1 revenues came in ahead of expectations.

Investors will be hoping that’s a trend that keeps going. The firm has lost money in three of the last four quarters.

Those staying in to see the spring back 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.


4. Virgin Galactic


Rich men heading into (nearly) space seemed to be the only thing the world was talking about at times last month.

The Bezos/Branson billionaire face-off was a bit like two cartoon villains with nothing better to do than conjure up something to fight over.

And, with the Top Gun-esque jumpsuits and cowboy hats back in the wardrobe, the excitement seems to be wearing off too. 

After engaging transmission towards the end of June, Virgin Galactic shares spluttered through July. 

While the Federal Aviation Administration (FAA) granted the company a license to start taking passengers into space, with flights currently set to begin in 2022, the stock lost a bit of momentum after the space race.

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.


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5. Tesla


It’s been a more muted few months for Tesla stock but the EV firm is still in the mix of top buys among Freetrade investors.

Q2 results at the end of July will have come as a boon to long-term holders though.

Revenues came in at $12bn, with 25.8% gross margins - both ahead of analysts’ expectations.

Tesla said ‘cost optimisation’ was a big driver of performance over the quarter. If it can continue keeping an eye on the purse strings, it could stand the firm in good stead in the second half of the year.

Musk’s Shanghai Gigafactory has become the global hub for its vehicle exports - ramping up capacity here could unlock even more cost savings in the long run.

The stock still looks expensive on valuation grounds but, as Tesla’s supporters are probably tired of repeating, it sees itself as more than just an EV competitor. The company’s goals of changing the way we treat and use energy are going towards vehicles now but the opportunity set is much more grand.

The recent results have clearly sated the market and the potential for whatever comes next is keeping long-term holders on board. If investors start to question that potential, such a high valuation could become a bit more of a problem.


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

7. Vanguard S&P 500 UCITS ETF USD (Acc.)


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 the best performing region 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

Although investors should keep in mind just how dominant those firms are in the overall index. 

Apple, Microsoft, Alphabet, Amazon, and Facebook now make up 23% of the S&P 500, according to S&P Dow Jones Indices. That might mean holders are slightly less diversified than they first thought.

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 incredibly important to the value of total returns.

8. Amazon


Amazon shares took a dive last week. Sales growth slowed in the Bezos behemoth’s second quarter as physical stores began to reopen across the US.

In hindsight, shops getting back to business was always going to hit the online player’s stellar rise. But 27% growth over Q2 clearly started to worry investors who were getting used to rates above 40%. 

It’s not a complete disaster though. Sales still hit $113.1bn, up from $88.9bn a year ago. 

Most firms would kill for that kind of growth but it’s a reflection of Amazon’s rise and dominance that even such huge figures are a cause for concern in some corners of the market.

For a lot of investors it will be a signal to consider whether the pandemic-induced boost to trade is on its way out.

And that’s something Amazon’s mulling over too. The firm forecasted Q3 sales figures of $106bn to $112bn versus analyst expectations of $119.3bn, according to FactSet.

Big tech took a wobble earlier this year after investors started to think about just how much they could grow after the pandemic. 

That prompted quite a big shift away from highly valued growth stocks into some of the unloved parts of the market that could do well if the economy recovers. 

With the likes of Apple still reporting big earnings, that hasn’t happened this time round but if tech starts to lose its allure, a rotation into so-called value stocks could happen later this year.

9. Apple


Speaking of which, Apple just smashed analyst expectations in its Q3 results.

Revenues came in at $81.41bn compared to the $73bn the market had been expecting. That 36% rise on last year represented record hauls in every one of the company’s global regions. 

Not a bad result for a firm forced to see ‘peak iPhone’ articles written every quarter since selfies began.

Talking of iPhones, sales of the device leapt 49.8% to $39.6bn. Mac sales were up 16.3% to $8.2bn and iPad sales rose 11.9% to $7.4bn.

Sales of services, which includes Apple music, movies and TV shows, amounted to $17.5bn, a hike of 32.9%.

So, the Mac monster marches on. But investors should keep in mind the value of a digital, portable device over the past 18 months. 

It may be that this was a freak year, yielding freak revenues but Apple users are sticky. The businesses forced to solve that working-from-home problem overnight in 2020 are likely to stay with the service providers they know and rely on, long after the pandemic is over.

That’s when business-to-business relationships really start to matter over one-off iPhone purchases for birthday presents.


10. Alibaba


It hasn’t been an easy quarter for Alibaba.

Chinese tech stocks have taken a big hit recently amid a government crackdown on some of the nation’s most powerful companies.

Two days after raising $4.4bn in the largest US IPO of any Chinese company since Alibaba 2014, DiDi’s share price started to crumble. 

Chinese regulators halted new user registrations and announced a probe into the company on cybersecurity grounds. Not long after, the authority told Chinese app stores to take DiDi down on concerns over data privacy.

Full Truck Alliance and Kanzhun, owner of Boss Zhipin, attracted similar attention days after listing.

The moves brought Alibaba into focus in particular, as it has had its own well-publicised run-ins with the government.

The much-anticipated Ant IPO was shelved late last year after founder Jack Ma appeared to throw shade on regulators. Alibaba was then fined $2.8bn in an antitrust investigation.

Investors have been trying to connect the dots between a potentially less US-friendly listing code for Chinese companies and what that means for firms already listed in the West. The result has been a pretty dire period for the Alibaba share price.

The company will be hoping it can shift attention away from the macro picture to its own bottom line this week. 

Alibaba has been trying to boost its business in lower-tier cities in China and we should get an idea of how that’s panning out tomorrow in its latest quarterly results.

China had its 6.18 midyear shopping festival during the quarter, which could play into the ecommerce platform’s hands. The retail holiday commemorates the founding of JD.com on 18 June 1998 and, along with Singles' Day in November (11.11) has become an important promotion season for brands in the country.

Past performance is not a reliable indicator of future returns. 

 

Source: FE, as at 30 Jul 2021. Basis: bid-bid in local currency terms with income reinvested.


What's your take on the stocks Freetrade users have been snapping up? 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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