2 FTSE shares I’m considering buying using my SIPP’s tax relief
I absolutely love my Self-Invested Personal Pension (SIPP). Like the Stocks and Shares ISA, it gives me protection from capital gains and dividend taxes. On top of this, it gives me a juicy regular bonus in the form of tax relief.
I’ve just had some lovely tax relief drop into my SIPP. And I’ve dug out two FTSE 100 stocks to potentially invest it in: Games Workshop (LSE:GAW) and Scottish Mortgage Investment Trust (LSE:SMT).
Want to know why I think they’re stock market winners?
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Game on?
Games Workshop’s a share that’s served me brilliantly well over the years. Since I first bought the now-FTSE 100 stock in December 2020, its shares have risen exactly 100% in value.
Factoring in dividends, I’ve more than doubled my money!
I’ve added to my position several times since then. And I’m considering doing so again following its last stunning trading update in November when it predicted “core revenue of not less than £310m” this year. That represents an annual rise of at least 15%.
The fantasy gaming market remains niche but it’s growing exponentially. And its industry-leading Warhammer line of products puts it in pole position to exploit this, as trading numbers show. It’s also taking steps, to increase licensing revenues, a potentially explosive growth segment in its own right.
My only concern is that Games Workshop shares now look historically very expensive. Its forward price-to-earnings (P/E) ratio is 35.8 times, which also sails above the Footsie’s average of roughly 12 times.
A valuation like this could prompt a sharp pullback if future trading is anything less than outstanding.
That said, I still think the stock is worth considering by investors and is deserving of a premium rating. All things considered, I’m optimistic its share price will keep rising strongly.
Tech titan
Scottish Mortgage Investment Trust is another SIPP selection I’m seriously considering in the coming days.
Its shares have headed in the opposite direction to Games Workshop’s over the last month. To my mind, this marks an attractive dip-buying opportunity.
A 10% share price drop in November leaves the trust at a 13% discount to its net asset value (NAV) per share. Further weakness can’t be ruled out as worries over an ‘AI bubble’ linger. But this value’s hard to ignore for me as a long-term investor.
There’s no getting away from the fact our lives are becoming increasingly digitalised. This has fuelled a rally across the US tech sector during the 21st century, and Scottish Mortgage has followed in its wake.
Can the trust continue its stunning run though? With growth engines like AI, robotics, cybersecurity, and cloud and quantum computing, I believe it can.
Scottish Mortgage shares have risen a whopping 285% since 2015, underlining its strong track record picking winners like Nvidia, Amazon and Tesla. I think it might just be a top buy for my SIPP this festive season.
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Royston Wild has positions in Games Workshop Group Plc. The Motley Fool UK has recommended Amazon, Games Workshop Group Plc, Nvidia, and Tesla. 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.
