My best shares to buy now are growth shares, with brilliant future prospects, that are flying under the radar. I’ve been saving up over the past few months. And I’ve got £2,000 burning a hole in my pocket.
One stock I’ve picked is seeing healthy growth at a good valuation. But it’s not an unprofitable tech stock. There’s no hydrogen energy here, nor electric vehicles. It’s much more boring than that. I don’t mind boring though, if I reckon there’s money to be made.
Norcros (LSE:NXR) just jumped right to the top of my picks for the best shares to buy now. The £245m market cap business supplies high-end bathroom and kitchen branded products. Most wouldn’t look out of place in a posh Kirsty and Phil makeover, like Abode sinks and taps, and Johnson ceramic tiles.
UK homeowners splashed out £39bn in the last 12 months on property improvements, according to recent surveys. It’s understandable, with more people working from home and seeing upgrades they’d like to make.
And I really like the figures I see in the Norcros back-end. Net profit is expected to jump 72% from £15m to £25.8m in 2021. And yet the shares are trading on a forward P/E of less than 10. So there’s value plus growth potential here.
Bosses have continually improved the company’s profitability over the past few years. Return on capital nearly doubled from 6.8% in 2020 to 12% in 2021. This shows me it’s a well-managed business.
Some of the country’s richest investors seem to agree these are the best shares to buy now. Premier Asset Management, the company’s largest institutional shareholder, upped its stake by 773,000 shares on 16 June. It now holds more than 11% of the business.
There are a few dampeners to consider. It’s not all sunshine and roses, and as an investor, I need to keep a calm head and not get overexcited. Group revenue for the year to 31 March 2021 dipped around 5%, to £342m. And Norcros’s South African arm pulled in a slightly lower percentage of the group’s revenue this year than than the year before.
“Group revenue outside the UK has decreased in the year to 41.6%, reflecting the impact of Sterling strengthening relative to the Rand,” Norcros said.
South African currency markets have experienced significant volatility over the past 12 months. And as local business reporters note, that made it bad news for anyone moving funds out of the country.
But looking further ahead, I can see Norcros expects its revenues to keep growing, along with those tasty net profits. And earnings per share (EPS) are forecast to jump from 22.4p to 31.5p next year. That 30% EPS hike comes at good value. Price-to-earnings growth stands at less than 0.5. Anything under 1 is generally considered excellent value.
Risk vs reward
Right now, I’m looking at top growth shares. Elsewhere, I’ve got a diversified portfolio stacked with high-dividend-yield businesses. That’s my safety angle covered. So I’m happy to take on more risk now in the hope of higher rewards.
Of course, the best shares to buy now are different for different people. My risk profile is not everyone’s risk profile. But I think I’ve identified a great growth company that could boost my ISA and make my money go much further.
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Tom Rodgers has no current position in the shares mentioned. The Motley Fool UK has recommended Norcros. 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.