Incredible growth

This B2B e-commerce dynamo, specialising in large parcel merchandise, has seen the shares catapult by an eye-watering 229% over the past year. To put that in perspective, the company hasn’t just outperformed its peers; it’s left them in the dust, with rivals in the sector stumbling backwards by an average of 10% during the same period.

From a fundamentals perspective, the case for the firm is as sturdy as the oversized furniture it helps distribute. With a debt-free balance sheet and solid profitability metrics, this company isn’t just growing — it’s thriving. In the last 12 months, it raked in $827m in revenue, with a cool $105m dropping to the bottom line. That’s a net profit margin of 12.74% — not too shabby for a company in the notoriously low-margin world of retail distribution.

But here’s where things get really interesting: analysts are projecting earnings growth of 25% per year for the next five years. In a world where many companies would sell their souls for double-digit growth, the strategy seems to be working.

What gets me really excited though is the valuation. Despite the strong performance, a discounted cash flow (DCF) calculation suggests there may still be another 71% increase in the shares before reaching fair value. Of course this isn’t a guarantee, and there may be plenty of bumps in the road, but it definitely has my attention.

Risks

However, the world of growth stocks is rarely straightforward, so let’s pump the brakes for a moment. The company’s meteoric rise means it’s no longer the hidden gem it once was. With a price-to-earnings ratio (P/E) of 11.2 times and a P/S ratio of 1.4 times, GigaCloud isn’t exactly in the bargain bin anymore.

There’s also the not-so-small matter of insider selling over the past three months. Now, insiders sell for many reasons, and it doesn’t always spell doom, but it’s certainly not the kind of signal that has investors doing cartwheels of joy.

And let’s not forget about volatility. With a weekly volatility of 8.9%, investing in this growth stock is a bit like riding a bucking bronco — thrilling when you’re on top, but with the constant risk of being thrown off.

One to watch

So, the question remains of what I should do with my current holdings. With great returns already, I could sell a portion, and lock in some of these gains while still keeping skin in the game for potential future growth. Or, I could sell the lot and find another opportunity.

However, with the valuation suggesting there could still be plenty more growth ahead, I’m keen to let this one run. I’ll be holding onto my shares, and keeping an eye out for more opportunities to buy.

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I’m sorry to say it, but we need to take our time, and invest in the right stocks to make our portfolios grow. So, here are two explosive stocks I’d buy today to build a bigger portfolio and generate a life-changing passive income in the future.

Have I missed the bus?

Blue Bird Corporation (NASDAQ:BLBD) is an American school bus maker, and it’s riding high on a wave of orders for its new electric buses. The stock is actually up 95.7% over the past 12 months, with a recent earnings beat attracting investor attention.

Currently, electric buses only make up a small proportion of the company’s total output. Management stated that the current order backlog is for 5,900 vehicles — worth $850m — but only 8% of these are electric.

However, the electric market is growing — big time. In Q2, electric vehicles (EVs) represented 9% of its total sales, versus 6% a year ago. “In Q2, EV bookings increased by 56% over last year as we sold a quarter record of 210 electric school buses,” management said in the earnings call.

This growing EV market has been driven by the Environment Protection Agency’s Clean School Bus program. While I’m not a fan of subsidies — they can make companies inefficient over the long run — the state’s $5bn of funding appears to be driving the transition to electric buses.

I do genuinely see subsidies as a risk, because when they go in 2026, companies have to be ready to go it alone. However, that doesn’t undermine the strength of the investment opportunity. Blue Bird is currently trading at 20.5 times forward earnings and has a price-to-earnings growth ratio of 0.64 — that’s so cheap!

A future e-commerce giant

GigaCloud Technology (NASDAQ:GCT) has nothing to do with cloud technology as the name might suggest. Rather misleadingly, it’s a company that connects large parcel — furniture — manufacturers in Asia with buyers and resellers in North America and Europe. It also provides the logistics.

The company’s lean business model and platform have proven very successful over the past 18 months. In its Q1 earnings call, the business highlighted that gross merchandise value had surged to $908m, representing a 64% increase over 12 months.

Moreover, the number of active third-party sellers grew by nearly 44%, reaching a total of 865 by the end of the quarter, while the number of active buyers increased by over 29%, reaching 5,493 for the trailing 12 months.

I think it’s worthwhile recognising that most of GigaCloud’s sellers appear to be in China, and that represents a risk in the current geopolitical environment. However, GigaCloud’s value proposition remains highly attractive, especially with its forward price-to-earnings ratio of just 10.7 times.

The passive income story

If I invest in companies that grow my portfolio between 10% and 15% annually, rather than 5% and 10%, I can achieve my passive income dreams sooner. However, it’s not about taking risks. It’s about making data-driven decisions.

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An income bigger than my salary

If I wanted to turn £20,000 cash into a second income bigger than my salary — let’s just assume that I earn around £50,000 a year — I’m going to need to be pragmatic.

If I were to invest all of that £20k into my favourite dividend stock, Nordic American Tankers, I’d only receive £2,350 a year. It’s an incredible dividend, but it’s a long way from £50,000. 

As such, I need to recognise that it’s going to take time before I can get anywhere near that. 

The special recipe

Twenty grand’s a great starting point, but I’ll need around £500,000 to generate £50,000 a year as a second income. 

So how do I get there? Well, with a combination of informed decision-making, regular contributions and reinvestment, I can see my wealth grow dramatically in a matter of decades.

It’s worth noting a mathematical rule for investment growth here. If I divide 70 by my portfolio’s growth rate, then I’ll know how long it takes for my portfolio’s value to double in size. 

In other words, if my portfolio were growing at 10% annually, which is towards the lower end of my personal goals, then my £20,000 would double in value after seven years.

This is the magic of compound returns. It’s something all investors need to understand thoroughly. Essentially it tells us that as our portfolio gets larger, so does our annual returns. 

Clearly, it’d take a while of doubling at 10% to reach £500,000. That’s why I need to make additional contributions, preferably monthly, to get my portfolio to grow. 

If I were to contribute £200 a month to my portfolio, I’d reach £500,000 in 25 years. If I were to add £500 monthly, it’d take me just 20 years.

Top pick for growth

In order for my portfolio to grow at 10% annually, I’ve got to pick stocks that are significantly undervalued. That’s why I invest in companies like GigaCloud Technology (NASDAQ:GCT).

The stock’s up 400% over the past 12 months, but I think it’s still undervalued by at least 25%. The stock’s currently trading around 12.3 times forward earnings and has a price-to-earnings-to-growth ratio of 0.6. That’s very appealing. 

GigaCloud is a Chinese company that many think of as an American one. Its name’s also a little misleading. The company connects large parcel — predominantly furniture — manufacturers in Asia with buyers and resellers in North America and Europe. In addition to this, it’s also facing some headwinds in the form of global shipping disruptions.

Nonetheless, it’s a very exciting and attractive business, even though it has nothing to do with cloud technology. In addition to connecting manufacturers and buyers, GigaCloud provides logistics services. It’s a novel business model that reduces the time unsold products sit in warehouses. 

It’s proven a strong investment for me so far, and I’d expect to see it continue to drive my portfolio forward.

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But if they don’t deliver the expected growth, these stocks come crashing down. As such, they carry more risk than mature investments.

So today, I’m talking about two attractively-priced growth stocks. Personally, I don’t think it’s that easy to find competitively-priced growth stocks in the current market. One reason for this is the buzz around artificial intelligence (AI) — it’s attracted a lot of money into stocks with anything to do with AI.

Growth stocks from China

Chinese companies, even those listed in the US, tend to trade at a discount to their international peers. Geopolitics is one reason for this as investors worry whether these Chinese companies could be punished by US-China trade wars. After all, the recently passed ‘Protecting Americans from Foreign Adversary Controlled Applications Act’ is an effective ban or forced sale of TikTok from its parent company ByteDance.

Likewise, investors are wary of Chinese accounting standards (CAS). These originated in a socialist era, focusing on state control rather than investor needs, and they can be less transparent than international investors are used to. On occasion, the figures have been outright manipulated.

Li Auto (NASDAQ:LI) and GigaCloud (NASDAQ:GCT) are two Chinese growth stocks I like, and they trade at huge premiums to their US peers. The discounts reflect the above reasons but, in my opinion, they’re far too cheap.

Meet Li and GigaCloud

Neither company operates in a highly-regulated space like tech and, as far as I know, aren’t recipients of state funding. If the US were to advance its trade programme against Chinese companies, I wouldn’t expect Li Auto or GigaCloud to be a target.

For context, Li Auto produces new energy vehicles (NEVs), and it’s the first of China’s NEV manufacturers to turn a profit. It reached profitability by focusing on Extended Range Electric Vehicles (EREVs — essentially hybrids), and is now bringing out a range of battery electric vehicles (BEVs), which have impressive range and charging times.

GigaCloud doesn’t operate in the cloud space. It connects furniture manufacturers in China with end markets in North America and Europe. Concerns that its operations had been overstated were recently relaxed after an investment researcher conducted an interview with the CEO.

Growth at a discount

Li and GigaCloud offer access to faster-growing companies at a discount to their American peers.

Li Auto’s stock currently trades at 14.6 times earnings. For context, this is in line with the average price-to-earnings ratio of the FTSE 100 — which really doesn’t have much in the way of growth stocks.

Given the company’s growth trajectory, Li is phenomenally cheap. It’s prudent to be concerned by the slowdown in China’s EV sales, but I’m hopeful it’s just a blip. Earnings are expected to grow at 19.3% annually over the next three-to-five years.

Meanwhile, GigaCloud trades at 11.3 times forward earnings, with earnings expected to grow by around 20% annually over the medium term. GigaCloud may face headwinds because of maritime disruption but, currently, the Panama drought and Bab-el-Mandeb crises haven’t had a huge impact.

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However, getting to the point where I’m earning a big tax-free second income from my portfolio is going to take time. That’s because even if I had £20,000 in a Stocks & Shares ISA, the most I could realistically earn in the first year is £1,400.

However, if I were willing to grow my investment, I could earn a lot more in the future. The thing is, it requires sensible and data-led investment decisions.

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.

Taking a long-term approach

The long-term approach is certainly my way of doing things. I don’t need the second income today, but I appreciate I may do in the future.

So every year I reinvest my returns and go again. This allows me to benefit from something called compound returns. Compounding happens when I earn interest on my interest, and it’s the real magic of investing.

But I need to be picking the right stocks. Because if I invest poorly, I could lose money. So I need a diverse portfolio of stocks, and one of my favourite picks right now is GigaCloud Technology (NASDAQ:GCT).

The name’s a little misleading. Essentially, the company connects furniture manufacturers in China with resellers and customers in North America and Europe.

Gone are the old models of unsold furniture — which takes up a lot of space — sitting in showrooms or storage facilities in the country of sale.

GigaCloud takes the furniture from the factory and delivers it to the customer overseas, while the sales are predominantly handled by other companies.

In fact, if I were to open an Amazon store selling furniture, I could use GIgaCloud to do all the logistics without me ever seeing the product.

Some investors were sceptical about the company, but some recent investigative work has shed light on the company’s operations. And the outcome was positive.

GigaCloud has noted that disruption in marine shipping could cause some challenges, especially to Asia to Europe routes, and if conflicts escalate.

And finally, from a valuation perspective, it’s trading at 12.1 times forward earnings. And that looks great given the growth trajectory.

Based on earnings expectations, GigaCloud’s trading at 9.7 times earnings for 2025, and 7.8 times for 2026.

Creating lifelong income

GigaCloud’s one of those companies I believe can take my portfolio forward and help me achieve my goals. If I could grow my portfolio at 10% annually, and contribute an extra £200 a month, after 15 years I’d have £171,972.

Assuming an annualised dividend yield of around 7% — which is possible today, but might be harder in 15 years — I’d be taking home a second income worth £12,038. And that could grow every year as companies tend to increase their dividend payments over time.

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So, if I were investing £100 of my money each month, which growth stocks would I invest in for wealth generation? Well, here are two companies I’m backing with my own cash.

GigaCloud Technology

GigaCloud Technology (NASDAQ:GCT) is among the fastest-growing companies I’ve come across. The firm connects furniture manufacturers, predominantly in China, with buyers and resellers in North America and Europe.

And it’s on a roll. In its recently released Q4 results, GigaCloud Technology saw earnings per share reach $0.87, more than double the $0.31 in the fourth quarter of 2022. This was on the back of 95% increase in revenue and 168% increase in operating income.

The firm’s USP lies in its ability to reduce storage costs for large parcel goods, namely furniture, by shipping straight to the end user or reseller. Just picture how much space you need to store unsold furniture in the country in which you intend to sell it. This is why GigaCloud is working. Its drop-shipping and last-miles delivery service has proven incredibly successful.

Of course, it’s not perfect. It lacks the digital reach investors expect from an e-commerce company while geopolitical events and weather issues have heavily impacted shipping in recent months.

However, I find the valuation metrics incredibly attractive. Despite being up 450% over 12 months, the stock trades on a forward price-to-earnings ratio of 12 times. That figure is expected to fall to 9.5 times and 8.1 times in 2025 and 2026 respective, based on analysts’ forecasts.

AppLovin

I’m up 96% on AppLovin (NASDAQ:APP). It’s among my most successful investments at this moment in time. The company helps app and platform operators maximise their advertising revenues through its proprietary technology, and is going through a stellar growth phase.

One downside is that AppLovin’s growth has been unsteady in recent years. In fact, we’ve seen revenue fall sequentially at points. However, it appears that we’re seeing a real turnaround thanks to the recently release of AXON 2.0.

AXON 2.0 uses AI to recommend apps that users will like based on their preferences and previous activity, thus boosting revenue. To date, it seems to be working with consecutive earnings beats, and a lofty expectations for Q1.

Despite the meteoric rise of the share price over the past 12 months, AppLovin still looks cheap. The stock trades at 16.95 times non-GAAP forward earnings, and has a price-to-earnings-to-growth (PEG) ratio of 0.85.

I appreciate the PEG ratio is based on earnings estimates, and estimates can be wrong, but the figure is very attractive.

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Buying the electrification dip

Shares in electric vehicle (EV) manufacturers have dipped in recent weeks following some less-than-impressive production figures. Li Auto is among them having delivered fewer vehicles than expected in February before lowering its Q1 deliveries estimate considerably.

Li then smashed its revised target, but the stock remained beaten down.

In short, Li, which has previously focused on EREVs (Extended Range Electric Vehicles which have combustion and electric engines), made an underwhelming entry into the BEV (Battery Electric Vehicle) market this year.

While there was lots of interest in the all-electric Li Mega, the vehicle’s appearance has drawn some criticism — the company didn’t respond positively to comments that it looked like a hearse.

However, Li’s rate of growth remains impressive and it recently became the first Chinese new energy vehicle manufacturer to pass the 700,000 deliveries mark. Its Q1 figures were also up 52.9% over 12 months. That’s still impressive, albeit slower than previous.

Moreover, while EV sales might be slowing — Tesla recently announced that annual sales had slowed sequentially — the electrification agenda’s here to stay.

From a valuations perspective, I find Li very attractive. It’s trading at 15.8 times earnings for 2024, 11.6 times earnings for 2025, and 9.1 times earnings for 2026. This is a huge discount versus Tesla, at 58.6 times earnings for 2024.

In turn, Li’s price-to-earnings-to-growth ratio currently sits at 0.8, inferring the firm could be significantly undervalued.

A new model for furniture shipping

GigaCloud Technology has nothing to do with cloud software as the name suggests. But it’s an interesting company that connects large package items (furniture) manufacturers in China with buyers and resellers in North America and Europe.

The business has proven very success as storing unsold furniture in the country of sale isn’t cheap. After all, furniture takes up a lot of space. So in this digital age, connecting producers with buyers provides a considerable efficiency gain.

The stock’s seen plenty of volatility, but the long-term trajectory’s upwards. It’s currently very cheap at 11 times forward earnings and offers best-in-class growth with earnings growing by 80.2% over the coming year. Moving forward, the price-to-earnings ratio falls to 8.8 times in 2025 and 7.4 times in 2026.

The company’s said it expects some macroeconomic headwinds in 2024, but that’s not enough to hold me back. GigaCloud is also looking to expand its Europe business following the success of its North American venture.

The post These growth stocks could supercharge my Stocks & Shares ISA appeared first on The Twelfth Magpie.

BP

What it does: BP is a global oil and gas company. It’s one of the largest companies in the world measured by revenues.

By Charlie Keough. The BP (LSE: BP.) share price has been gaining momentum in 2024. As I write, it’s up 7.2% year to date.

As such, I decided to increase my holdings in the Footsie powerhouse. The stock looks cheap, trading on around seven times trailing earnings. To go alongside that, it boasts a 4.5% dividend yield. That’s above the FTSE 100 average of 3.9%.

The largest risk to the business is the transition to a greener future. We’ve seen mounting pressure placed on firms such as BP in recent years.

However, I’m confident it’ll be some time before we see fossil fuels completely phased out. It has been widely touted that the target for reaching net zero is 2050. But that’s now being questioned. What’s more, BP has a strong energy transition strategy in place.

At its current price, I couldn’t resist. If I have any spare cash going forward, I may look to pick up some more shares.

Charlie Keough owns shares in BP.

GigaCloud Technology

What it does:  GigaCloud’s platform connects furniture factories in Asia with resellers in Western Europe and North America.

By James Fox. GigaCloud Technology (NASDAQ:GCT) has created a niche for itself, connecting ‘large parcel retailers’ – furniture makers – typically in China, with resellers and consumers in higher wealth markets. As such, the name is slightly misleading, and having followed analysis of this stock closely in recent months, it’s putting some investors off. 

Nonetheless, the business looks highly attractive. It’s trading at 14.1 times forward earnings and 11.7 times earnings for 2025. GigaCloud is a business in overdrive, with revenue increasing 94.8% over the past 12 months. Management recently guided towards another strong quarter, with revenue above estimates. 

There is some concern about the impact of Red Sea disruption on the business. However, management has suggested that Asia-Europe is a much smaller part of its business compared to Asia-North America. There was no mention of the Panama drought. 

All in all, I find this highly volatile stock an attractive long-term pick, with considerable potential for share price growth. 

James Fox owns shares in GigaCloud Technology.

Hunting

What it does: Hunting produces specialised equipment used for oil and gas drilling and related activities.

By Roland Head. I added Hunting (LSE: HTG) to my portfolio in early March, after the company published a strong set of 2023 results and confirmed a positive outlook for 2024.

Hunting suffered during the pandemic period due to a slowdown in drilling activity. This highlighted the company’s main weakness – it’s heavily cyclical and dependent on the spending plans of its energy producer customers.

However, demand recovered strongly last year, with revenue up 28% to $929m and pre-tax profit of $50m, reversing a 2022 loss. The company’s balance sheet remained in good health, in my view, with modest net debt of $33m and an overall net asset value of $957m.

This net asset figure is equivalent to a book value of around 455p per share, substantially above Hunting’s recent share price of 320p. I think there’s value here – also highlighted by the stock’s 2024 forecast price-to-earnings ratio of 10 and dividend yield of 2.8%.

Roland Head owns shares in Hunting.

Imperial Brands

What it does: Manufacturers and markets tobacco and tobacco-related products to customers in the UK and abroad.

By Mark David Hartley. With headquarters in London and Bristol, Imperial Brands (LSE:IMB) is one of the largest multinational tobacco producers in the world. I decided to buy shares in the company for two reasons – a buyback program and a high 8.5% dividend yield.

The controversial nature of the tobacco industry threatens valuations, leading firms to initiate incentives such as buybacks and increased dividends. The trade-off is a subdued share price in exchange for more profitable dividend returns.

Imperial’s most recent earnings reported an impressive £3.4bn in operating profit, representing an increase of 26% from the previous year. Subsequently, analysts forecast an average 16% price rise in the coming 12 months.

However, despite strong financials, shares are down 5.5% this year. The weakened performance has prompted IMB to initiate a £1.1bn buyback program, half of which is already done with the second half to be completed by the end of October.

Mark David Hartley owns shares in Imperial Brands.

Kraft Heinz

What it does: Kraft Heinz is a packaged foods company. Around 33% of the company’s revenues come from condiments and sauces.

By Stephen Wright. I started buying shares in Kraft Heinz (NASDAQ:KHC) for a while now. When I started, I had a specific investment thesis.

While I wasn’t expecting huge revenue increases from the company, I thought an improving balance sheet would allow it to return more money to shareholders over time. And that’s been happening.

After bringing its debt down over the last few years, the firm has now reached a point where its leverage is under control. As a result, it has begun a share buyback programme.

The market doesn’t seem too impressed – the stock hasn’t responded particularly positively. But with my initial thesis seemingly playing out, I’ve been adding to my investment.

Results from the fourth quarter of 2023 were hampered by inflation and this is a risk going forward. In my view, though, the stock looks like a bargain at today’s prices.

Stephen Wright owns shares in Kraft Heinz.

Legal & General Group

What it does: Legal & General Group is one of Europe’s largest investment managers and financial services companies.

By Royston Wild. Back in March, I bought shares in financial services colossus Legal & General Group (LSE:LGEN) for the second straight month.

I had cash to invest after selling out of veterinary care provider CVS Group on rising regulatory threats. And Legal & General shares still looked attractively priced despite recent price gains.

Today the company still looks dirt cheap. It trades on a forward price-to-earnings (P/E) ratio of 9.2 times. Furthermore, its dividend yield stands at a brilliant 8.8% dividend yield.

I was especially attracted to the company on account of its dividend prospects. Its forward yield is currently far ahead of its ten-year average of 6.9%. This reading also comfortably beats the 3.8% average for Footsie shares.

This dividend yield is also well supported by Legal & General’s cash-rich balance sheet. The company’s Solvency II capital ratio stood at an enormous 224% as of December.

These formidable financial resources could give it scope to pay above-average dividends for years to come, as well as the means to invest for future growth.

Royston Wild owns shares in Legal & General Group.

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And, of course, if I’m a UK resident, it can all be tax free if I invest through a Stocks and Shares ISA. This incredibly useful vehicle protects my wealth generation from capital gains and my second income from tax.

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.

Getting started

Let’s imagine I’ve got £5,000 to kick off my investment journey. Well, the first thing I’m going to have to do is open an investment account. I use Hargreaves Lansdown, but it’s expensive. There are a range of alternatives including AJ Bell and Robinhood UK. And of course, I’m going to want to use the ISA if I can.

Next, I need a strategy. I need to recognise that £5,000 isn’t going to get me a substantial second income right away. In fact, £5,000 could probably only bring in around £350 a year, assuming I invested in stocks with an average 7% dividend yield — it’d be hard to achieve much better.

So how will I build my £5,000 into something much bigger? Well, I need to consider contributing more money, perhaps a small percentage of my salary, or maybe £200 a month. And I also need to reinvest my portfolio’s earnings each year so that my gains compound.

After just 10 years, and hoping for a strong return of 10% annually (which is by no means guaranteed), I could grow my £5,000 into £54,503. This would be enough for me to generate £3,815 a year — a considerable improvement from just £350.

Investing for growth

Of course, the first phase isn’t about investing for dividends. It’s about investing to grow my portfolio so I can draw a larger passive income in the future. So where should I invest?

GigaCloud Technology (NASDAQ:GCT) is a little volatile, but I think it’s simply underappreciated. I invest in GigaCloud as part of a diverse group of holdings because it I’m hoping it will realise fair value and in turn help my portfolio grow into something that can generate a substantial passive income.

The company, despite its tech-focused name, connects furniture manufacturers, predominantly in China, with resellers and customers in North America and Europe.

Disruption to global shipping does pose a risk to this full-solution company, but management recently said that the Houthi activity in Bab el-Mandeb strait was having limited impact as GigaCloud’s largest market is North America.

Nonetheless, its rise has been phenomenal over the past 12 months, with revenues increasing 94.8%. Moreover, it’s very cheap. The company is trading at 11.15 times earnings for 2024, 9.4 times earnings for 2025, and 6.9 times earnings for 2026.

I appreciate the company raises some alarm bells. It’s clearly not the American firm it claims to be — it’s Chinese. But its earnings trajectory is hugely exciting. It fact, earnings are expecting to grow by another 71.9% over the next 12 months. It’s an impressive story.

Finally, it’s got momentum on its side. The stock is up a considerable 478% over the past 12 months. It could go higher based on the metrics above.

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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.

So what if I were starting a Stocks and Shares ISA today? Well, if possible, I’d want to build a diverse portfolio of stocks.

Although it’s worth considering how much our brokerages charge before build a portfolio. For example, given Hargreaves Lansdown‘s fee, I don’t tend to invest less than £1,000 in a single stock.

However, if I were investing through a cheaper platform, that would be less of a concern. In turn, this could make it easier to have diverse portfolio of holdings.

So here are two stocks I’d consider buying as part of a broad ISA portfolio.

GigaCloud Technology

GigaCloud Technology (NASDAQ:GCT) wouldn’t be the first stock on most people’s lists but I just can’t ignore the value here. The company essentially connects furniture manufacturers in China with markets in North America and Europe, and then provides the logistics solutions.

It’s a unique business that responds to the challenge of storing unsold large parcel goods in the country of sale — just think about how big a warehouse must be to hold 500 sofas. So GigaCloud connects the makers with buyers.

Investors might be concerned then about the impact of shipping disruption around the world, but GigaCloud recently said it’s having only a limited impact. That’s because its main markets are in North America.

On a valuation perspective, GigaCloud is trading at 11.1 times earnings for the year ahead, 9.5 times earnings for 2025, and 6.9 times for 2026. That’s incredibly cheap for a company on such an exciting growth trajectory.

Li Auto

Li Auto (NASDAQ:LI) is another Chinese company on my list. The stock fell last week after the company downgraded its own production figures for Q1, citing lower-than-expected order intake and operational issues with its star model Li Auto Mega.

This is a very different narrative to the one we’ve been getting over the last year during which Li blew all of its competitors away. In the fourth quarter alone, deliveries reached 131,805, reflecting a substantial 184.6% year-over-year surge.

But despite this dip in Q1, I have faith that the firm will come back stronger. It’s developed a great niche by focusing on EREV (Extended Range Electric Vehicles), and has just entered the BEV (Battery Electric Vehicle) market with an all-singing-all-dancing seven-seater.

It’s currently trading around 17 times forward earnings — that’s taking into account lower sales in Q1 — and has a price-to-earnings-to-growth ratio around 0.8. In the current market, it’s very cheap, and I’m excited to see what happens when it starts tapping overseas markets.

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