I asked ChatGPT to pick the ultimate FTSE 250-based Stocks and Shares ISA portfolio and it said…
Letâs be clear, I would never use ChatGPT, or any other robot, to populate my Stocks and Shares ISA. Artificial intelligence (AI) can be fun, but it isnât a substitute for proper research.
By its own admission, ChatGPT definitely isnât a stock picker, and anything it throws up demands a healthy dose of scepticism. Itâs prone to picking up old information â tickers, valuations, dividends â and present it as new.
That said, it can be a handy starting point, to throw a few names at me that I might have overlooked. So I asked it to fill a five-stock Stocks and Shares ISA purely from FTSE 250 shares.
Balfour Beatty shares tempt me
First up was Balfour Beatty (LSE: BBY), which it calls “one of the UKâs biggest construction and infrastructure groups”, operating across everything from transport to energy. ChatGPT highlighted its long order book and global contracts, stable earnings and history of shareholder rewards via dividends and share buybacks.
The Balfour Beatty share price has had a strong run, soaring 60% in 12 months and 120% over two. It’s now on track to meet full-year expectations after a 20% jump in its order book, which already stood at £18.4bn.
Full-year earnings are projected to grow 5%, with monthly net cash at the top end of guidance, to around £1.2bn. On top of this, a new share buyback kicks off in January. Yet the stock looks good value trading on a price-to-earnings ratio of 16.5.
Infrastructure can be bumpy. Projects can overrun and pricing can be tricky â but Balfour Beatty looks bright. Itâs a solid candidate to explore for a balanced growth-and-income ISA. So what about the others?
ChatGPT also suggested Bloomsbury Publishing, best know for the Harry Potter franchise. But since it nabbed this tip straight from The Motley Fool, I’ll go to the original rather than a chatbot synthesis.
Risks, rewards, omissions
It then picked oil and gas producer Harbour Energy, which Iâve previously explored and ignored. I’ve been burned by oil explorer stocks in the past, and I’m clearly not the only one. The Harbour share price is down 15% this year, and 55% over five. ChatGPT highlighted its eye-popping 10% trailing yield, but didn’t breathe a word about the huge capital loss potential, except mentioning it was cyclical.
Its next pick was European construction materials supplier Grafton Group, highlighting its steady growth and dividends. The yield’s halfway decent at 4%, but the shares are down 2% over the last year and flat over five, so recent growth’s been non-existent. Of course it might recover, but I need to do some heavy research of my own here too.
Finally, it suggested TwentyFour Income Fund, a high-yielding investment trust offering a trailing yield of 9.68%. Which is, of course, suspiciously high. It focuses on “higher-yielding, less liquid credit assets that can deliver strong dividends”, ChatGPT said, and warned I might need to seek capital gains elsewhere. Since the shares stand roughly where they did a decade ago, I’d second that.
These are interesting starting points, and I’ll do a deeper dive into Balfour Beatty and Bloomsbury. From here, all the research will be my own rather than AI suggestions. The robot can talk, but now it can walk. Investing’s too important to be left to a bot.
The post I asked ChatGPT to pick the ultimate FTSE 250-based Stocks and Shares ISA portfolio and it said… appeared first on The Motley Fool UK.
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Bloomsbury Publishing Plc. 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.
