If you want to make serious money from investing in shares, then you need to own at least some companies with big share price growth potential.
Massive growth potential in a very profitable industry
One such share, in my opinion, is the boutique asset manager Polar Capital (LSE: POLR). Its 12 autonomous teams run 25 funds, some of which are focussed on the technology industry and have been doing very well during the pandemic. The group aims to recruit best-in-class investment teams and give them the infrastructure to run their funds to outperform the market.
It has had some success in growing the number of teams under its umbrella. This has fed through to strong growth. There’s no reason why this can’t continue. The business model is very scalable because new investment teams can be easily integrated.
The group has net cash of £107m, so is well financed to see out Covid-19. The group is making progress in developing an Asian client base, which should really help it grow assets under management and profits in the future.
In difficult economic conditions, the group has maintained its dividend. But I think the major reason to own the shares is for the potential for future share price growth.
The undervalued tech share with massive growth potential
I think data solutions company D4T4 (LSE: D4T4) is a potentially undervalued tech share. A price-to-earnings ratio of 20 compares very favourably to other data-focused shares, as well as the broader technology industry.
Yet there are more reasons to believe the company, and its share price, can grow. Gross profit margins have been growing and most recently stood at over 60%.
The group has no debt, which is a major positive. Especially given that market conditions are challenging and clients are taking longer to sign deals.
Once the Covid-19 situation normalises, the board expects to go back to growing the dividend so the shares offer massive growth potential alongside a modest income.I think the focus for the business is investing in future growth.
Lastly, digital transformation within organisations, perhaps accelerated by the pandemic, will continue and that will help D4T4 to grow.
Going strong and with further to go
Team17 (LSE: TM17), is a gaming company I’ve bought because of its massive growth potential. The gaming market is in favour right now with investors, which should continue. The company has an entrepreneurial founder who still has a significant stake in the company. It has also been growing revenues quickly.
Most recently the shares were boosted by an announcement that Team17 had signed a publishing agreement with Tencent Games’ NExT Studios for its game, Crown Trick. The announcement builds on a growing record the developer has with Chinese gaming companies that could be a platform for profitable growth in the future.
But the shares have dropped back over the last week or so. This could make them good value right now, even though they’ve had a strong 2020 to date.