We asked our freelance writers to share the top growth stocks they’d buy this month. Here’s what they chose:
Rupert Hargreaves: Frasers
As the country slowly moves out of lockdown, I think Frasers (LSE: FRAS) could be one of the big winners. Formerly known as Sports Direct, the company is one of the UK’s most successful retailers. As the UK reopens, I expect sales and profits to rebound.
Led by the outspoken CEO Mike Ashley, Frasers has also been snapping up distressed retail assets throughout the crisis. I think these deals could help turbocharge the group’s recovery in 2021.
That said, the main challenge facing the business right now is the potential for another wave of coronavirus. This could set back the group’s growth plans.
Rupert Hargreaves does not own shares in Frasers.
Nadia Yaqub: Saga
I reckon things look promising for Saga (LSE: SAGA). The company’s customer base is the over-50s, which are typically loyal and have more money to spend. The UK vaccine roll-out for this demographic has so far been successful.
Saga recent results were dismal. But I think the fact that it has seen a 20% increase in cruise bookings indicates there is pent-up travel demand. I’m not really worried about the company’s debt pile. I reckon once travel restrictions are eased, Saga’s revenue and profitability could bounce back soon.
Nadia Yaqub does not own shares in Saga.
Jamie Adams: Auto Trader
After delivering a stellar 35% return over the last year, the Auto Trader (LSE: AUTO) share price has plateaued in 2021.
Fears of declining advertising spend and semiconductor shortages are playing on investors’ minds.
However, following a recent report from the Interactive Advertising Bureau in the US, ad spend has never been higher worldwide. Auto Trader’s dominant position in the auto industry’s advertising market will benefit from increased spend from sellers as well as a potential car sales boom as people spend their lockdown savings.I see this growth stock’s recent dip as a buying opportunity in April.
Jamie Adams owns shares in Auto Trader.
Royston Wild: Trifast
I think that fastenings manufacturer Trifast (LSE: TRI) is an excellent UK growth share to buy today. City analysts are expecting the business to report annual earnings growth of 26% in the financial year to March 2022.
I think Trifast is a particularly-good buy today as it’s due to release a pre-close update for fiscal 2021 on Thursday, April 22. Last time the UK share updated the market in February it said that “trading levels continue to strengthen” and that it consequently expected revenues for the full year to be “slightly ahead of current market expectations.” Be warned, though, that a sudden worsening in the Covid-19 battle could cause severe supply disruptions that might derail this recovery.
Royston Wild does not own shares in Trifast.
Harshil Patel: boohoo group
Boohoo group (LSE:BOO) is determined to expand its business over the coming years with its powerful online-only platform in the fast-fashion sector.
Over several years, it has consistently produced double-digit earnings growth. Both organically and through acquisitions. Recently, the group acquired several brands including Warehouse, Debenhams, and Dorothy Perkins.
There are further signs of expansion from recent purchases of a new large warehouse in Daventry and a new freehold office building in Soho for its London-based brands.
Overall, it offers a return on capital of 27% and net cash on its balance sheet. All at an undemanding price-to-earnings ratio of 33.
Harshil Patel owns shares in boohoo group.
Zaven Boyrazian: Alpha FX
Alpha FX (LSE:AFX) is a currency hedging and international payments solution business that serves over 600 clients, including ASOS and Holland & Barrett.
Its services have proven to be incredibly popular, especially its relatively new global enterprise payment network. Revenue generated by this segment in 2020 grew by 417%!
Currency risk management is currently the larger contributor to overall revenue. And performing such services requires an incredibly high level of skill since the slightest mistake could lead to substantial losses.
But given its successful track record and enormous growth opportunity in international payments, Alpha FX is a stock I want to buy more of for my portfolio.
Zaven Boyrazian owns shares in Alpha FX.
Christopher Ruane: B&M
Discount shop chain B&M (LSE: BME) had a stellar 2020. But so far in 2021 shares have only added 5%.
I think many investors are wary that the chain, which saw a big sales boost in lockdown, could suffer from reopening. There is a risk that new shoppers won’t be loyal to the chain, in a highly competitive retail environment.
However, the company’s retail prowess and compelling customer proposition already led to it performing well before lockdown. I expect to see strong numbers from the chain again this year.
Christopher Ruane does not own shares in B&M.
Kevin Godbold: Fonix Mobile
Mobile payments and messaging services provider Fonix Mobile (LSE: FNX) arrived on the FTSE AIM market in October 2020. However, the growth stock was first established in 2006. And prior to its admission to AIM the business delivered fast-paced, profitable growth.
Looking ahead, City analysts expect low, double-digit percentage earnings growth in the current trading year to June 2021 and for the year after that. And with the share price near 182p, the forward-looking earnings multiple is just below 24. However, the stock has been rising since listing. And at £182m, the market capitalisation has already doubled. Nevertheless, I reckon the growth proposition looks resilient here.
Kevin Godbold owns Fonix Mobile shares.
G A Chester: Gamma Communications
A suite of products across instant messaging, video conferencing and other media, combined with ‘always-on’ and ‘work-from-anywhere’ connectivity, make Gamma Communications (LSE: GAMA) a leader in the fast-growing unified communications as a service (UCaaS) market.
Furthermore, the company has recently established footholds in mainland Europe with several strategic acquisitions. The UCaaS market in Europe is behind the UK but heading the same way. While there’s no guarantee Gamma will be able to replicate its UK success on the Continent, the growth opportunity is huge. As such, I think a rating of 35 times last year’s earnings could prove cheap.
G A Chester has no position in Gamma Communications.
Edward Sheldon: ASOS
My top British growth stock for April is online fashion retailer ASOS (LSE: ASC).
ASOS posted a fantastic set of half-year results earlier this month. For the six months to 28 February, group revenue was up 25% at constant currency to £1,976m, while diluted earnings per share (EPS) were up 198% to 81.9p. As a result of this performance, the company increased its guidance for the full year.
Since the company posted these results, its share price has fallen. I view this share price weakness as a buying opportunity. There are risks to the investment case, of course, however, with the forward-looking P/E ratio in the mid-30s, I think it’s a good time to be buying the stock.
Edward Sheldon owns shares in ASOS.
Jonathan Smith: The Hut Group
The Hut Group (LSE:THG) is a British e-commerce business. It owns brands such as MyProtein and LookFantastic that have large online revenues. It also helps other businesses improve marketing capabilities due to real-time customer data, with past clients including Honda and Nestle.
THG went public last year and is trading well above the IPO level. In a recent trading update, 2020 revenue was shown to be 41.4% above 2019 levels. In guidance given, management expect 2021 revenue to be 30-35% above 2020 levels! This positive momentum that the business has makes me want to get in on the action.
Jonathan Smith has no position in The Hut Group.
Roland Head: Auto Trader Group
The pandemic has accelerated the development of online car retailing. I don’t see this trend reversing, at least not completely.
I’d tap into this growth by investing in classified listing business Auto Trader Group (LSE: AUTO). I expect this business to perform well as the UK returns to normal (hopefully) in 2021.
Auto Trader’s dominant market share means it’s an essential service for most used car dealers. The business generates very high profit margins — 65% last year, even with the impact of the pandemic.
Auto Trader shares never look cheap, but I think the stock’s forecast P/E of 26 is fair. I’d buy these shares in a Stocks and Shares ISA for long-term gains.
Roland Head has no position in any share mentioned.
Paul Summers: boohoo Group
boohoo (LSE:BOO) has been in the headlines for all the wrong reasons recently. Nevertheless, I’m confident the steps taken to rectify issues with suppliers will see the fast-fashion growth stock emerge as a bigger and better company in time.
Shares remain below the highs hit in mid-2020. With people looking for new clothes to wear out to fully ‘unlocked’ bars, however, this gap will likely close before long. Factor in a raft of recent acquisitions (e.g. Debenhams) and a bulletproof balance sheet, and a normally-frothy forecast P/E of 33 actually looks great value for the growth on offer.
Paul Summers owns shares in boohoo Group.
Tom Rodgers: Open Orphan
Human challenge vaccine and antiviral clinical trial operator Open Orphan (LSE: ORPH) is starting to spin out non-core assets from its main business, adding extra value for shareholders. And with the share price around 50% higher in the last month, more investors are starting to see the potential here.
If it can hold this momentum, the £295m market cap business will become one of AIM’s 100 largest companies when the index is reconfigured in May 2021. Now profitable month-on-month and with around £20m cash on its balance sheet, all eyes are on FY20 results, likely coming in June 2021.
Tom Rodgers holds shares in Open Orphan
Andy Ross: Calnex Solutions
Calnex Solutions (LSE: CLX) specialises in testing and measurement services for telecommunication (5G) networks. Given the UK has just had its 5G spectrum auction, investor interest in telecoms service providers ought to be high.
With a market capitalisation of only around £100m, the company is smaller and should be able to grow quickly. Especially as results have been good. A trading update in February showed a probably bright future, as it revealed that revenue for FY21 would be ahead of market expectations.
The main risks with this share are twofold. One is that as it reports in US dollars, a weaker dollar could hurt profitability. The other is its valuation. The P/E ratio is around 29. Overall, though, I think it’s a top British growth stock.
Andy Ross does not own shares in Calnex Solutions.
Kirsteen Mackay: Pets at Home Group
I think Pets at Home Group (LSE:PETS) will continue to grow throughout April. That’s because the UK is beginning to re-open, and people are getting out and about in the sunshine with their dogs. Pet purchases exploded in the pandemic and the trend does not appear to be subsiding. The BBC even reported a pet food shortage across supermarkets last month. Pets at Home has a price-to-earnings ratio of 33, earnings per share are 13p and it offers a dividend yield of 1.6.
Kirsteen Mackay does not own shares in Pets at Home Group.
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The Motley Fool UK has recommended Alpha FX, ASOS, Auto Trader, B&M European Value, boohoo group, and Gamma Communications. 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.