Despite general wariness in the UK market after March’s crash, there are still some growth shares experiencing great price momentum.
Let’s look at three examples.
Growing at a fair clip
Last week’s record full-year results from logistics firm Clipper Logistics (LSE: CLG) were lapped up by the market and understandably so.
At just over £500m, group revenue was up 8.8% over the year to the end of April thanks to strong organic growth. Profit after tax came in at £16.2m, up from 13.4m in 2019.
Over the period, Clipper entered into new contracts with companies like Joules and the Very Group. It also extended existing deals with Boohoo-owned PrettyLittleThing.com and Sports Direct.
While the retail landscape may be in a tricky spot due to Covid-19, Clipper said that it had seen “a very positive start” to FY21 and “exceptionally high levels of demand” for the e-fulfilment and returns management services it provides. As a result, the company now believes that its full-year numbers will “comfortably exceed market expectations”.
Trading on 21 times forecast earnings for FY21, Clipper isn’t cheap. With the potential to keep expanding in the UK and overseas, however, it could be a growth share worth paying up for.
Another company doing very well for investors is videogames developer Frontier Developments (LSE: FDEV). Last Friday’s update sent the share price to an all-time high and, again, it’s easy to see why.
Having met sales expectations so far in the financial year, Frontier now believes it will deliver revenue “within the top half of the current range of analyst projections” (between £83m and £95m). At least some of this will be generated from the slate of releases due between now and the end of May 2021.
Jurassic World Evolution will hit the Nintendo Switch in November. Two other titles – Lemnis Gate and Struggling – are being launched under the Frontier’s new label for third-party publishing (Frontier Foundry). This part of the company forms a big part of its strategy over the next few years.
In addition to this, there will be updates to existing titles: Elite Dangerous, Planet Coaster, and Planet Zoo.
Frontier’s shares now trade on an eye-watering 61 times earnings. That’s too high for me (even for a growth share) but it could be one to pick up on general market weakness.
I’ve covered kettle safety control manufacturer Strix (LSE: KETL) quite a few times now. I can’t resist drawing attention to the small-cap once again. Since April, its shares have been on the boil, rising almost 90%.
In July, Strix reported that performance over the first six months of 2020 had been “resilient“. A “marked recovery” in June coupled with a strong order book means it expects to report similar profits to those achieved last year. That’s not a bad outcome considering the supply side disruption it faced earlier in the year when factories in China needed to shut.
Highly cash generative, Strix continues to reduce its debt pile. At the end of June, net debt stood at just under £37m. Due to cost-cutting, this was roughly £6m lower than originally targeted.
Once a bargain, the stock now trades on a P/E of 16. With 14 new products due for launch this year, however, I can still see it moving higher. There’s a forecast yield of 3.5% to boot.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
Paul Summers owns shares of Strix Group. The Motley Fool UK has recommended Clipper Logistics and Frontier Developments. 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.