The Motley Fool

3 UK growth stocks to buy

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.

Union Jack flag hanging from a building
Image source: Getty Images

As the government progresses with its reopening plans, I’ve been looking for UK growth stocks to buy for my portfolio. As such, here are three UK mid-cap growth stocks I’d buy to profit from the UK economic recovery.

UK growth stocks to buy

Intermediate Capital (LSE: ICP) is the first enterprise on my list of UK growth stocks to buy. This company is an asset manager that specialises in private debt, credit and equity investments. 

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!

I think this could be a great way to invest in the UK and European economic recovery through a diversified basket of assets controlled by a professional manager. The stock also supports an attractive dividend yield of 2.6%. The payout has grown at an annualised rate of 7% over the past six years. 

The one significant risk of investing in businesses like Intermediate is there’s limited disclosure on what it owns. As such, it may not be suitable for all investors. There could be skeletons hiding in the closet, which may only appear in a financial crisis. 

However, I’m comfortable with this risk, which is why I’d buy the stock for my portfolio today as part of a basket of UK growth stocks.

Homebuilding growth 

The UK housing market is currently firing on all cylinders. That’s good news for homebuilder Bellway (LSE: BWY)

Using forecasts presented by the company, City analysts believe group net income will rise to £408m this year, up from £193m in 2020. As the UK struggles to build enough houses to meet demand and home prices continue to increase, I think this figure will increase in the years ahead.

It seems as if all Bellway needs to do is keep building, and buyers will keep buying. 

Of course, this trend may not last. House prices can’t go up at 10% a year forever. An increase in interest rates could curb demand for mortgages and send home prices lower.

Higher costs may also prove to be a headache for the business. These could hurt profit margins, reducing profitability and limiting capital available for reinvestment in new dwellings. 

Even after taking these challenges into account, I think Bellway remains one of the best stocks to buy right now. That’s why I’d  add it to my portfolio. 

Tech sector growth 

The final company I’d buy for my portfolio of growth stocks is Softcat (LSE: SCT). The IT infrastructure solutions provider has reported explosive growth over the past five years. As technology continues to play an increasing part in our daily lives, I think the group will continue to report growth

As well as organic growth, it looks to me as if the business has the capacity for acquisitions. At the end of 2020, it had £70m of cash on its balance sheet.

That could provide firepower for deals, or a special dividend for investors. The stock already supports a yield of 1.9%, at the time of writing. This is why I think the stock is one of the best shares to buy now. 

Softcat has room for growth, but the firm could face challenges as well. These include competition, which is only growing in the tech sector, and the potential for higher costs. 

These challenges aside, I’d buy Softcat for my portfolio of growth stocks. 

One FTSE “Snowball Stock” With Runaway Revenues

Looking for new share ideas?

Grab this FREE report now.

Inside, you discover one FTSE company with a runaway snowball of profits.

From 2015-2019…

  • Revenues increased 38.6%.
  • Its net income went up 19.7 times!
  • Since 2012, revenues from regular users have almost DOUBLED

The opportunity here really is astounding.

In fact, one of its own board members recently snapped up 25,000 shares using their own money...

So why sit on the side lines a minute longer?

You could have the full details on this company right now.

Grab your free report – while it’s online.

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended 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.