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3 UK growth stocks I’d invest £1,000 in today

Stock MarketsAug 10, 2020 07:10
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3 UK growth stocks I’d invest £1,000 in today

There’s an awful lot of economic uncertainty at present. Just last week, the Bank of England said the UK economy is facing its worst annual decline in 99 years.

I wouldn’t let this uncertainty stop you from investing however. Right now, there are plenty of companies generating strong results and seeing their share prices move higher as a result.

Here, I’ll highlight three UK growth stocks I believe have the potential to climb higher in the months and years ahead. If you’ve £1,000 to invest right now, I think these growth stocks are worth a look.

A top FTSE 100 growth stock The first is Hargreaves Lansdown (LON:HRGV) (LSE: HL), the largest investment platform in the UK.

There are a few reasons I like the look of Hargreaves right now. Firstly, since the lockdown started, savings levels in the UK have soared. I think it’s likely some of this money will flow into stocks and funds. Secondly, American financial services company Robinhood has just scrapped its UK launch. This means one potential avenue of competition has disappeared.

Last week, Hargreaves also issued a strong set of full-year results. Highlights for the year ended 30 June included:

  • A 5% rise in assets under administration to £104bn

  • An increase of 188,000 active clients to 1,412,000

  • A 27% increase in diluted earnings per share (EPS) to 65.9p.

It’s also worth pointing out the company lifted its full-year dividend by a huge 31% to 54.9 pence per share. That dividend increase suggests the company is confident about the future.

Overall, I see plenty of investment appeal here. HL shares currently trade on a trailing P/E ratio of about 28. At that valuation, I see the stock as a ‘buy’.

Exciting tech stock Another UK growth stock I’m bullish on is GB Group (LSE: GBG). It’s a tech company that uses advanced technologies, such as machine learning and facial recognition, to verify people’s identities. Currently, it has the ability to verify over 4bn people worldwide.

GB Group has a strong track record when it comes to growth. Full-year results, issued at the end of June, showed the company has plenty of momentum right now:

  • Revenue was up 39%

  • Profit, before tax, was up 40%

  • Adjusted basic EPS increased 20%

The company said: “Our strong balance sheet, leading technology, and diversified customer base leaves GBG well-positioned for long-term success.”

GB Group currently trades on a trailing P/E ratio of 33.5. I also see the stock as a ‘buy’ at that valuation.

Online fashion champion Finally, I also like the look of online clothing retailer ASOS (LON:ASOS) (LSE: ASC), despite the fact the stock has enjoyed a strong run recently.

ASOS issued a decent trading statement in mid-July. For the four months to 30 June, group sales were up 10% to £1,014m. Meanwhile, active customers increased 16% year-on-year. The company advised it’s “on track to deliver strong year-on-year profit growth.”

ASOS shares are quite expensive. Using next year’s EPS consensus of 79.9, the stock trades on a forward P/E of 54. That valuation adds risk.

However, in my view, the valuation isn’t a deal-breaker. Brokers are currently upgrading their EPS forecasts and also lifting their share price targets. RBC, for example, just raised its price target from 4,000p to 5,000p.

In today’s digital world, I think ASOS is well-placed to succeed. I’d buy this UK growth stock today.

The post 3 UK growth stocks I’d invest £1,000 in today appeared first on The Motley Fool UK.

Edward Sheldon owns shares in Hargreaves Lansdown, GB Group, and ASOS. The Motley Fool UK has recommended ASOS and Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2020

First published on The Motley Fool

3 UK growth stocks I’d invest £1,000 in today
 

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