Capital gains tax set to rise? – 3 share ideas for the long-term

The government’s pledge to build 1.5 million houses this parliament is a bold ambition. While it looks a touch too stretching to us, recent policy towards the housebuilding sector has been favourable.

Labour have already pledged a massive £39bn towards affordable homes, and reforms are in the works to ease planning policies and remove some of the roadblocks for builders. Persimmon stands out to us as a name in the sector that looks well-placed to benefit.

Performance over the first half of the year has been impressive, with an uptick in new home completions and favourable house price trends helping revenue rise at double-digit rates. And with a tight grip on costs, that’s flowing down into improved profitability.

A key differentiator from peers is Persimmon’s in-house materials business - it gives the group quicker and cheaper access to key materials. When the group can use its own bricks, tiles, and timber, it saves around £5,500 per plot.

Significant pent-up demand for homes in the UK remains unchanged. Persimmon’s substantial land bank is a key strength on this front, and it should be a beneficiary of easier planning policies when they arrive.

Keep in mind that it could be a while before the housing market picks back up properly, and that’s also dependent on things like interest rates, which impact affordability. But with Persimmon’s houses typically priced more than 20% below the newbuild national average, it offers a slight layer of resilience if times get tougher.

The balance sheet is in decent shape, and there’s an attractive forward dividend yield of 5.5% on offer. But remember, no shareholder returns are guaranteed.

The valuation remains well below the long-run average on a price-to-book basis, which looks attractive to us. But as with any cyclical business, times can stay tough for a while, so potential investors will need plenty of patience.

With the world's ageing population steadily increasing, demand for healthcare services continues to grow as senior citizens seek to maintain a good quality of life into their later years.

The Labour government has already set out its 10-year plan to reform the NHS, aiming to cut down waiting times and deliver treatment to more patients. On hand to support this is global pharmaceutical giant AstraZeneca.

AstraZeneca is a UK-based company at the cutting-edge of drug development. The group was in great health at the half-year mark, with both revenue and underlying operating profits rising at double-digit rates.

There are lofty ambitions to grow revenue from $54.1bn in 2024 to $80bn by 2030. We think that’s achievable, but it won’t be without some challenges.

Progress so far has been good, and there’s a strong pipeline of potential new products – an area where Astra’s hit rate in the clinic has been impressive.

The group has already had a string of regulatory approvals for cancer therapies so far in 2025. After approval, sales of cancer drugs can build gradually for many years as patient access improves, approvals are gained in new markets, and clinical trials prove their efficacy in additional diseases.

Despite the strong track-record, Astra still has to contend with the substantial risks that come with drug discovery. Even after heavy investment, plenty of drugs never make it to market, so investors need to be prepared for disappointments.

The valuation’s sitting a touch below the long-run average on a price-to-earnings basis, reflecting some concerns around tariffs and the US-led action on drug pricing.

This looks attractive to us, given that we see the tariff risks as manageable due to the company’s growing footprint in the US. But there are no guarantees, and investors need to be able to stomach some ups and downs along the way.

The government’s defence strategy has been laid out for the next decade, amid elevated geopolitical tensions. This includes more than doubling the country’s defence spending by 2035 as NATO allies agree to increase their defence budgets from 2% to 5% of GDP.

As the UK’s largest defence contractor, BAE Systems looks well-placed to capture some of this extra spending. The group manufactures heavy-duty military equipment like fighter jets, land combat vehicles and submarines.

The group’s first-half results were strong, with all divisions in growth territory. That gave management the confidence to raise its full-year targets, with sales and underlying operating profits now expected to grow by 8-10% and 9-11% respectively.

With the order book standing at a mammoth £75.4bn, just shy of record levels, BAE has plenty of work lined up for the years ahead. These are typically long-cycle orders, with revenues spread over several years, giving the group great revenue visibility.

Despite being a UK-based company, BAE pulls in around 45% of its revenue from the US – the world’s largest defence spender. This offers some diversification to its business, and with US defence budgets also expected to rise around 30% to record levels this year, the demand outlook remains positive.

But keep in mind that profitability hinges on its ability to estimate future costs. The long-term nature of many contracts means that the related risks and costs can change over time. Currently, potential supply chain issues and production delays have been called out by management as the main trip hazards.

BAE Systems remains one of our preferred names in the sector, given its diverse revenue streams and track record of strong execution. But that’s not gone unnoticed by the market, with its valuation on a price-to-earnings basis rising well above the long-run average. We still see room for upside from here, but the higher valuation increases the risk of any operational missteps being punished by the market.