3 stocks that are untouchable in my Stocks and Shares ISA

Last year my Stocks and Shares ISA was down about 25% or more. This was their worst performance in years. The reason is that my ISA is generally geared towards growth. And the market became aggressive against growth stocks last year.

Despite this, there are some investments in ISAs that I still wouldn’t sell. That’s because I think the growth potential is very attractive. So, I consider the stock to be underperforming (in a good way) in my portfolio, as it is.

Built for the long term

The purpose of Scottish Mortgage Investment Trust (LSE: SMT) is to identify outlier companies with the most stock market returns. This investment philosophy was influenced by the work of Hendrik Bessembinder, a finance professor who published a paper showing that almost all stock market returns come from only 4% of listed companies.

Trust has been an investor for a long time Amazon and Tesla. And even though these stocks have been going through some down times lately, they’ve both gotten better over time. Tesla shares, for example, have risen nearly 400% in five years, even after a 65% decline.

I believe the manager will be successful again in identifying the next big winner, although it is certainly not guaranteed.

Scottish Mortgage’s share price has fallen 35% over the past 12 months. However, over 10 years, the stock is up around 379%.

As a long-term investor, the most important thing to me is where the stock will be many years from now. And I am optimistic that it will be higher than today. So the shares are kept in the ISA.

Premium quality

The second deposit I can’t make in my current ISA is Diageo (LSE: DGE). The drinks giant has more than 200 labels, including some of the world’s most famous alcohol brands. It is sold in more than 180 countries.

Above Brand Diageo Kab

BRAND	ORIGIN
Johnny Walker	Scotland, 1820
Guinness	Ireland, 1759
Gordon’s	England, 1769
Smirnoff	Russia, 1860
Baileys	Ireland, 1974

It neatly captures the almost timeless quality of a leading brand. It also has some pricing power, especially with premium brands.

One risk with Diageo’s stock today is its valuation. With a price-to-earnings (P/E) ratio of 23, the stock is valued at a premium relative to others. FTSE 100 sharing.

However, I think the longer I spend with this stock, the more sense it makes.

Driving back

The third underperforming stock in my current portfolio has some similarities with Diageo in terms of enduring brand strength. And it’s a good supercar maker Ferrari (NYSE: RACE).

The Italian automaker is 75 years old, but it’s still growing like a new company. It remains one of the premier luxury brands in the world.

Their customers are the ultra-wealthy, which gives them almost unlimited power. In fact, the more companies raise their prices, the more exclusivity they seem to give their brands. Needless to say, this is a very powerful competitive advantage.

I think this advantage may protect the company’s profits during a potential global recession, although this is not certain.

I just started a position in Ferrari Stock last year, and it’s up 10% so far. But it has not been touched, as I expected.