Every financial year, I can contribute up to £20,000 to my Stocks and Shares ISA. And once my cash is in the ISA wrapper, I self-manage my portfolio of stocks and funds. Any money I make in the portfolio isn’t taxed, and that’s why I see the ISA as a great vehicle for my long-term investments.
Right now, I’m looking at stocks to add to my portfolio before September. The summer months are traditionally calmer than other times of the year. And now I’m specifically looking for stocks that might fare well amid an economic downturn and higher interest rates.
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As interest rates rise, so do net interest margins. Barclays (LSE:BARC) would be doing rather well this year if it wasn’t for a £1.9bn charge to cover the cost of buying back securities it sold in error. H1 pre-tax profits fell 24% to £3.7bn on the back of its trading fiasco and a £300m impairment provision for bad debts amid the cost of living crisis.
In late July, Barclays said that income had come in at £13.2bn, up 17% year on year. This included £800m from hedging arrangements related to the over-issuance of securities.
The stock is currently down 7% over the past year. And I see now as a good time to buy as I anticipate performance to improve in the coming months as interest rates get hiked again. I already own Barclays shares but would buy more today.
When the global economy goes into reverse, investors often turn to gold, pushing the price upwards. Centamin (LSE:CEY) performed poorly last year amid falling revenue and an impairment on assets in Burkina Faso. But it has since been on the rise after reaffirming its guidance for the year ahead.
Currently, it gold production forecast for 2022 is between 15,000 and 45,000 ounces higher than total production in 2021.
I think the general trend for gold this year is upwards, although it has fallen this week. Higher price will allow Centamin to cover higher production costs, mentioned in its recent update. I’d buy more Centamin stock today.
Unilever (LSE:ULVR) owns brands such as Dove, Vaseline, and Magnum ice cream. And that’s important because household-name brands give the company pricing power. This is a positive defensive quality that we are already seeing pushing the company’s earnings upwards.
In H1, Unilever lifted its prices by 9.8% compared to the same period of 2021. But this had little impact on volume, which only fell by 1.6%. Profits were up during the first half as sales revenue grew 8.1%. For the year as a whole, Unilever now expects to beat its previous forecast of sales growth between 4.5% and 6.5%.
A weak pound may also inflate revenues as the firm sells in over 190 countries.
Naturally, if the recession is really bad, which it shouldn’t be, this will hurt Unilever, but on the whole, I’m bullish. I’d buy more Unilever stock today.
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James Fox owns shares in Unilever, Barclays and Centamin. The Motley Fool UK has recommended Barclays and Unilever. 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.