Deciding which shares to buy for your Isa is difficult, so we asked our expert writers to suggest their favourite long-term holdings. The six shares they've come up with are in very different companies, but all have the potential to deliver capital growth to patient investors.
Helical Bar (HLCL)
Don't be discouraged by the bad news coming out of the commercial property sector. Clever firms are seeking to profit from the carnage. Helical Bar raised £27.7m in January through a share placing, and intends to use the proceeds to snap up cut-price shops and offices from distressed property firms. The company is hoping to secure 'once in a lifetime' bargains that will recover strongly once the upturn arrives. Its spending power could be boosted to around £500m thanks to a joint-venture with an un-named US pension fund.
Chesnara (CSN)
Chesnara buys established life assurance funds that are closed to new members, and then runs them down in an orderly fashion. Management says that the coming year will provide plenty of opportunities to buy additional schemes as companies look to offload their pension liabilities. Shareholders' funds are free of any exposure to equity markets and Chesnara's secure financial position has resulted in a continued increase in dividend payments – the interim dividend for the first half of 2008 rose by 5 per cent to give an intoxicating yield of over 15 per cent.
BG (BG.)
Oil & gas company BG's production continues to grow strongly. The recent purchase of Queensland Gas adds coal-bed methane reserves that it can develop into liquefied natural gas (LNG). This bolsters BG's already flourishing LNG business. The group has won contracts to construct new LNG terminals in Brazil, Hong Kong and Chile, spreading its geographical risk. BG also has a major interest in the Santos Basin oil discovery – one of the world’s most exciting strikes for years.
WH Smith (MSWH)
Having made continual efforts to cut costs over many years, WH Smith was much better prepared than many retailers for the slump. It also has a track record of rewarding investors, dishing out a £60m special dividend last year. Its dividend yield of 4 per cent is more than two times covered by earnings, while it also generates plenty of cash. It also has low debts. WH Smith's cash-generating capability is unlikely to be hurt by the downturn because of its key defensive quality: the average transaction value at its stores is a mere £5.
National Grid (NG)
Utility stocks are steady performers for a self-select Isa. However, the recession is reducing demand for energy, and the threat of deflation is also a concern, given that these firms generally carry a lot of debt. Still, 55 per cent of National Grid's operating profits come from electricity transmission and 25 per cent from gas distribution, with only a small amount from generation, which is more prone to volatility. And its high levels of index-linked debt mean it is better placed to deal with deflation than others in the sector. The company plans to increase its dividend by 8 per cent a year for the next three years.
Capita (CPI)
An exemplary track record and exposure to defensive but fast-growing customers makes Capita a great holding for troubled times. As the recession bites, companies are looking to save money by outsourcing certain activities. Capita oversees a wide range of vital day-to-day functions, such as fund administration. Much of its revenue comes from regulated industries and the public sector and it has a strong pipeline of future projects. At 677p, the shares trade on 18 times this year's forecast earnings, which isn't cheap, but in such times it is worth paying for quality. Over the past year Capita's shares have risen 3.5 per cent while the FTSE 350 has lost a third of its value.
