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It’s less than two weeks until the New Year, and although the ISA allowance coincides with the financial year, January 1 is likely to present a new opportunity to maximize portfolio benefits. As such, it is the ‘time of the year’ to plan the 2025 strategy. So, with that in mind, here are two ISA strategies you should consider implementing in 2025.
Consistent contributions are always important
Writing at the end of 2024, it seems appropriate to highlight that trees do not grow to the sky. The US stock market has delivered impressive growth over the past 12 months, but with prices looking quite spicy, it may not be a good time to invest a lot of money.
Instead, keeping fixed investment contributions is a smart strategy. This method, known as pound cost averaging, involves investing a fixed amount at regular intervals, regardless of market conditions.
The advantages of this strategy include:
- Reducing the impact of market volatility by balancing the cost of stocks over time
- To promote sound investment habits
- Reducing the stress of trying to time the market well
Taking the emotions out of it
The second strategy involves using quantitative investment models, and moving away from investing based on pure emotion. This should help investors assess the increasingly difficult market environment, which is characterized by improved volatility and, in the US at least, very high prices.
And while investors may have been rewarded in recent years for choosing US stock market trackers, it may be a good time to use statistical models to find pockets of value within the market.
One stock that continues to stand out to me is this one Celestica (NYSE:CLS). The stock is up 250% in the past year, indicating that it has very strong momentum. However, it currently trades at 25 times forward earnings and is expected to grow earnings at a compound annual growth rate of 28% over the medium term. This leads us to a price-to-earnings growth (PEG) ratio of 0.92. That’s a plus in the current climate.
The company operates in two main business divisions – Advanced Technology Solutions and Cloud Computing Solutions – and has risen after the demand for products and services of the life cycle in parts of the cloud, many of which are related to artificial intelligence (AI).
However, investing is not without risk. Some analysts pointed out that two-thirds of Celestica’s business comes from just 10 customers, which raises a certain level of risk of harassment.
Still, it’s hard to argue that this isn’t a business at the top. The AI boom has allowed the company to shift to higher margin operations in cloud computing. The group now derives more than two-thirds of its revenue from the CCS segment, which grew by 42% in Q3, while the ATS segment, which includes serving the aviation industry, grew by only 5%.
Momentum, growth, profitability, and attractive valuations. This stock has a lot going for it. Celestica is my biggest catch and I just added to it.
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