The Motley Fool

2 high growth UK shares I’d buy in September

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.

Businessman leading a chart upwards
Image source: Getty Images.

Plenty of top UK growth shares are soaring right now. Just look at Clipper Logistics, which I tipped as a growth share for August. It’s risen about 25% in a month.

Here, I’m going to highlight two UK growth shares I like for September. I believe both have the potential to deliver strong returns to investors over the medium to long term.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Technology expert

Recently, I worked on a large survey of financial services firms. I can’t give you any details about this project, unfortunately. However, what I can tell you is that the vast majority of firms surveyed said they’re looking to upgrade their digital infrastructure in the near term. Ultimately, Covid-19 has been a massive wake-up call in regards to the importance of digital transformation.

One UK growth share that should benefit from the digital transformation drive is Softcat (LSE: SCT). It’s a FTSE 250-listed company that offers technology solutions and assists organisations with their IT infrastructure. It helps organisations sort out their IT networks, cybersecurity, cloud migration, data analytics, and collaboration tools – all of which businesses are focusing on post-Covid-19.

Softcat issued an encouraging trading update in August. It said it’s continued to trade satisfactorily during the final three months of the year and that it’s delivered operating profit for the full year slightly ahead of the board’s expectations. It also said it’ll resume its normal dividend policy. This suggests the company has momentum right now and management is confident about the future.

Softcat shares aren’t cheap. Currently, the stock’s forward-looking P/E ratio is about 34. I wouldn’t let that valuation put you off, however. The long-term trend here appears to be up. And, as they say, the trend is your friend. I see this UK growth share as a ‘buy’.

Data is the new oil

Another UK growth share I like for September is First Derivatives (LSE: FDP). It’s a leading provider of big data analytics. Its clients include big banks, pharmaceutical companies, and telecommunication firms.

First Derivatives has grown at an impressive rate in recent years (three-year revenue growth of 57%) and a trading update in July showed the company has continued to make progress throughout Covid-19.

For the four months ended 30 June, revenue was up 6% on the year before with software revenue up 8%. The company said it remains “strategically well-placed” and that it’s encouraged by the growing demand for its streaming analytics from potential customers and partners.

After a really strong run in 2017 in which the stock got a bit ahead of itself, FDP has underperformed since mid-2018. However, it now looks like the stock is regaining some mojo. After falling during the Covid-19 crash, it’s recovered to near its 2020 highs. I think there’s a good chance the stock will continue to rise in the medium to long term as demand for the company’s data analytics continues to grow. After all, they say data is the new oil.

The forward-looking P/E ratio here is about 42, using next year’s earnings forecast. That’s not cheap. But for a high-growth data stock, it’s not unreasonable, in my view. I’d buy this UK growth share today.

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

Edward Sheldon owns shares in Clipper Logistics, Softcat and First Derivatives. The Motley Fool UK has recommended Clipper Logistics and Softcat. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.