2 UK growth stocks to buy and hold for a decade

These are the two UK growth stocks that I have zeroed in on to add to my portfolio for steady growth over the next decade.

| More on:

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.

As a young investor, I am always on the lookout for stable UK growth stocks that I can buy and hold for years. I gauge businesses by looking at industry potential and the expansion strategy of the company.

Based on these factors, I have identified two UK growth stocks that I would add to my portfolio and hold for steady returns over the next decade.

$300bn industry

A recent report published by Accenture valued the gaming industry at $300bn including console sales and e-sports revenue. British game developer Frontier Developments (LSE: FDEV) is capitalising well on this boom and is set to release big titles that could make it a top name in the industry in the years to come.

In the last 12 months, its stock has risen 30.4% and five-year returns stand at an incredible 1,344.1%, showing how far the industry and company have grown in the last half-decade.

The total revenue in the first half (H1) of 2021 was £36.9m. A large chunk of this comes from paid downloadable content (PDLC) from existing successful titles like Elite Dangerous and Jurassic World Evolution.

The H1 2021 report stated that Elite Dangerous: Odyssey and Jurassic World 2 is also part of its line-up for 2021. This is exciting news for investors as sequels are money-minters in the gaming industry. The company expects 2023 revenue to be £160m–£180m. It also has large cash reserves of £34.9m after investments in a new development label, Frontier Foundry.

But, the gaming industry is very unpredictable. Take the example of CD Projekt RED’s Cyberpunk 2077. The hype was massive, but glitches killed the game completely and the company is set to lose around $50m.

Despite this uncertainty, I remain keen on investing in the gaming sphere and Frontier Developments is on top of my list of UK growth stocks to buy.

Pet care growth stock

Veterinary service provider CVS Group (LSE: CVSG) is on an impressive run in the market. Its share price recently hit an all-time high and I think this growth stock is just getting started.

The pandemic brought with it a huge increase in pet ownership in the UK and CVS Group has benefited immensely from it. In the last 12 months, the share price has gone up 116.9% and there are no signs of this slowing down.

The company’s revenue went up 5.2% to £427.8m in 2020 along with a 46.8% increase in cash generated from operations and a £12.4m investment in new equipment and facilities. This shows me that the company is ready to make the push to be the top vet healthcare provider in the UK. The board expects profit to more than double by 2023–24, which could greatly impact shareholder returns. 

A major concern is the current entry price, which might seem inflated because of the 50.8% increase in share price over the last six months. But, I still think it is a great long-term investment because the number of pet owners could continue rising as pets are increasingly becoming a part of the modern home. Even public spaces are becoming increasingly pet friendly. As a pet owner myself, I understand the importance of quality vet services. The business is showing signs of steady growth over the next 10 years, making it a must-have UK growth stock for my portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.

More on Investing Articles

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

2 of the best stocks to buy now with £500

I think that Berkshire Hathaway and Activision Blizzard are two of the best shares to buy today. I think they…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

I bought 10 cheap shares. Here’s what happened next

After recent price falls, we bought 10 cheap shares for extra passive income in future. This mini-portfolio offers a tasty…

Read more »

Close up view of Electric Car charging and field background
Investing Articles

Is now a good time to buy Chinese EV stocks as economic growth slows?

Chinese EV stocks tend to trade at a considerable discount to their US counterparts. And that's one reason I like…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

I’d happily start investing in today’s stock market – here’s why

The stock market has been moving up even as the economy has been looking shakier. Would our writer start investing…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Up 22% in a month! This FTSE 100 takeover target could rise further

A takeover bid for an FTSE 100 firm is big news. Here's what I'm doing about RS Group shares after…

Read more »

Young female analyst working at her desk in the office
Investing Articles

Income shares could help me turn £300 into £500. Here’s how

Our writer believes investing in the right income shares over the long term could be lucrative. Here is his approach.

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

I bought these FTSE 250 shares for fat dividends!

These two FTSE 250 shares have gained in value since I bought them recently. But I still see these stocks…

Read more »

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

Should I buy this REIT to add to the others that pay me juicy dividends?

Jabran Khan looks closer at this real estate investment trust (REIT) and decides if he would add the shares to…

Read more »