Volatile markets are scaring many investors away, but you could be missing out on fantastic returns in the long term if you pass up on a stocks and shares Isa. Here are some key shares to consider in the run-up to the new Isa season.

By Iona Bain

Investors shouldn't be spooked by volatile markets ahead of the new Isa season, as a leading analyst urges us to invest our valuable tax-free allowance in stocks and shares this year.

Some 30% of investors are worried about the eurozone crisis and a precarious economic recovery in Britain and just 1% class themselves as high risk investors, says the Share Centre.

But Graham Spooner from the online stockbroker is appealing to investors not to ignore the potential of stocks and shares Isas. The expert has handpicked three companies, all with different levels of risk attached, that are worthy contenders for your Isa selection this year.

For risk-averse investors who need an income, Mr Spooner recommends Compass Group, which has almost half of its holdings in healthcare, education and defence.

He says the group's dividend is improving, acquisitions are continuing and the business is less likely to come up short in economic downturns.

Those willing to accept a medium degree of risk may want to consider Amec - the company serves a diverse range of robust industries, from transport to oil, gas and power stations.

"Amec's current ties and operations stand them in a good position for opportunities with top contractors, including the US government and military establishments and the UK government. However, competition and cuts in government spending remain a concern for the company," he states.

For investors living on the edge, Medusa could be a star pick, says Mr Spooner. It is a small mining company in the Phillippines with no diversity in its stocks, but it has recently piggybacked off the rising price of gold and is now paying dividends to loyal investors.