These 3 growth stocks are already up 60%+ this year. Should you buy?

Why are these three growth stocks flying and is now the perfect time to jump on board?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m looking today at three stocks that have soared by more than 60% since the start of the year. Why are they flying and is it the right time to pile in?

Highly attractive ratios

Kazakhstan miner Kaz Minerals (LSE: KAZ) has gained 65% so far this year. At a current price of 589p, this FTSE 250 firm is valued at £2.7bn.

In a production report last month, the company said it had met its copper guidance for the year and exceeded its guidance on by-products (gold, silver and zinc).

Copper output was 73% ahead of the prior year as Kaz ramped up production at its new Bozshakol and Aktogay projects. The company is rapidly developing into a top class, open pit copper miner with revenue expected to double from 2016 to 2017 and earnings forecast to rise by 175%.

This puts Kaz on a forward price-to-earnings (P/E) ratio of 12.6 with a P/E-to-growth (PEG) ratio of less than 0.1. These are highly attractive ratios and remain so if we look ahead to 2018 when the P/E falls to 9.1 and the PEG rises to little more than 0.2. There looks to be considerable scope for the shares to continue rising and they seem very buyable to me at their current level.

A nice little growth stock?

Shares of Premier Veterinary Group (LSE: PVG) have risen 71%, helped by an announcement of further good news this morning, which I’ll come to shortly.

Like Kaz, PVG is listed on the main market. However, it has a ‘Standard’ listing as opposed to the ‘Premium’ listing of top FTSE firms. Disclosure and compliance rules are less rigorous with a standard listing, so it’s wise to treat these companies with a bit of caution.

PVG has undergone a major transformation, selling its veterinary practices to focus on its buying business (which negotiates discounts on animal products to enable independent practices to compete with larger groups). It is also focusing on its high-growth preventative healthcare programme for pets, branded ‘Premier Pet Care Plan’.

The latter business increased its global revenue by 75% last year. Today’s good news is of a new contract, which further increases its penetration of the US market. Before today, the house broker was forecasting £4.35m revenue for 2017 with a pre-tax loss of £2.15m, followed by £8m and a £0.25m profit for 2018. At a share price of 235p the market cap is £35m, giving a price-to-sales (P/S) ratio of 4.4 for 2018. This could be a nice little growth stock but I’d like to see a broker update before deciding whether to look further into the business.

Considerable potential?

Wandisco (LSE: WAND) is the biggest riser. An 81% gain has seen the shares climb to 362.5p, valuing this AIM-listed big data firm at £132m.

In a trading update last month, the company reported record bookings in Q4, which comes on top of previous good progress on agreements, contracts and orders with a number of parties, including blue-chip IBM.

I believe Wandisco has considerable potential but it’s trading on a rich 14.5 times expected 2016 sales, and a still-high P/S of six looking ahead to 2018, at which time it’s also forecast to be still lossmaking. As such, I think this is one to watch for the time being.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Should I buy more Rolls-Royce shares near 500p?

This investor is wondering whether to buy more Rolls-Royce shares this summer or to just stick with those he already…

Read more »

Investing Articles

After its big fall, is the National Grid share price dirt cheap now?

The National Grid share price fell sharply in reponse to new rights issue plans. But is it an even better…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Starting in June, I’d invest £1,000 a month to aim for a £102,000 second income in retirement

This author highlights a less well-known FTSE 100 stock that could help his portfolio generate a very big second income…

Read more »

Investing Articles

Down 47% in 5 years, is the IAG share price due a bounce?

Many companies in the travel sector have seen fierce rallies since 2020. But with the IAG share price still down…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Despite its drop, I reckon this is one of the best FTSE 100 stocks to buy and hold!

The FTSE 100 has been climbing in 2024 but this favourite of our writer's has been falling. Despite this, she’s…

Read more »

Investing Articles

AI stocks vs EV shares; which is the best sector for me to invest in?

Jon Smith considers the recent rally in AI stocks and weighs up whether to allocate more money there versus EV…

Read more »

A graph made of neon tubes in a room
Investing Articles

Do Greggs shares have even more growth ahead?

Greggs shares have seen some solid growth in the last few months, as the economy shows positive signs. But is…

Read more »

Investing For Beginners

How I’d aim to grow my Stocks & Shares ISA from £20k to £1m

Jon Smith explains how diversification and focusing on sectors for the future can help grow his Stocks and Shares ISA.

Read more »