Here's how I can invest £1,000 in a Stocks and Dividends ISA in September
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With my Stocks and Shares ISA, I'm looking for long-term opportunities. That means companies will do more in the future than they do now.
Most of the time, this is because the business is experiencing temporary difficulties. And I think this may be the case for now.
US consumer decline
Earlier this week, the CEO of Dollar General issued a worrying update. According to the company, its customers – typically US households with an annual income of less than $35k – are under financial pressure.
The report revealed that many use credit cards to pay for basic needs. In addition to this, almost 30% have a credit card that has reached its limit and 25% expect to lose a payment in the near future.
Interestingly, however, households with higher incomes do not seem to feel the same pressure. Although they are conscious of how they spend money, they don't trade as much as they could.
That's bad for Dollar General, whose stock fell nearly 33 percent on the news. But it gives investors like me something to think about when looking for stocks to buy in September.
Investing for the long term
A weak buyer means short-term profits are likely to be lower than expected for several companies. And one of these Dr. Martens (LSE: DOCS).
The company is listed in the UK, but about 37% of its revenue comes from the US. And it targets the type of consumer that Dollar General identifies as cautious, rather than vulnerable.
Operating in an industry where consumers can easily switch to cheaper alternatives can be dangerous. And the business has been struggling recently, causing the stock price to drop.
Management suggests that the recovery may take some time. But I think Dr. Martens has two key qualities that make the stock a good long-term investment.
Survival and prosperity
The first thing a business needs in a difficult time is a strong balance sheet. This is what allows him to go through difficulties to the other side – a necessary condition for future success.
Dr. Martens has this. With around £368m in total assets, the company should be able to survive for the foreseeable future even if profits are depressed for some time.
Another important asset is a solid product. This should help keep the company relevant in the minds of customers when they find themselves in a situation with high spending power.
And, this is something Dr. Martens has it. Its boots are well known for their quality and durability, making them popular when consumers feel they can spend money on luxury shoes.
Investing £1,000
According to its management, 2025 will be the year of change for Dr. Martens, before things get better in 2026. So any investment should be made with a long-term perspective.
For someone looking to invest £1,000 every month, however, this could mean there is an opportunity to build a significant stake before prices recover. I think that would be good to consider.
Even if Dr. Martens or a different stock, however, I'm looking for stocks that are trading at an extraordinary discount. This is where I think I can find the best opportunities.
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