The Motley Fool

2 UK shares to buy in September for explosive returns

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.

The FTSE 100 index is on course for its best month since April despite looking flat since mid-August. I am looking at two UK shares to buy now for my portfolio that are showing signs of explosive growth through the rest of 2021 and beyond.

Tech stock with 27% returns in 2021

Multinational software company Sage Group (LSE:SGE) has recovered well from the lows of 2020. In the last six months alone, this UK tech share has risen 31%. The company has a subscription model for its finance software. I think this is the way forward in the software space compared to a one-time buy model.

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!

The third-quarter trading update shows that recurring revenue increased by 5.0% to £1.2bn boosted by a software subscription growth of 11% to £920m. Sage Business Cloud, an integrated accounting solution for small and medium businesses saw recurring revenue growth of 32% to £205m. Revenue figures grew 7% in North America and 4 % in Northern Europe.

Software development is cash-intensive but Sage Group’s cash and available liquidity stands at £1.3bn. The company is confident of future performances with CFO Jonathan Howell stating that “Sage’s growth is accelerating, driven by increasing demand for Sage Business Cloud solutions, particularly in cloud native”.

Despite an attractive business model and steady increase in revenue, the business faces stiff competition, especially in North America from giants like Amazon Web Services. But, growth in the region, the subscription model, and 90% customer retention makes me confident of future potential.

I think the company is well-poised for growth past its all-time high share price of 846p and is on my list of UK shares to buy in September.

UK share to buy in an explosive sector

The gaming industry has surpassed every category in the entertainment industry and currently generates over £300bn. I remain bullish on the UK gaming market with companies showing tremendous potential. Team17 Group (LSE: TM17) is a profitable UK gaming share that I think could explode in September and beyond. Here’s why.

Revenue in 2020 grew 34% to £83m with a gross profit of £39.1m. Also, Team17 Group’s earnings per share has shown a compounded growth of 58% since 2017. This is very impressive to me considering the turbulence of the industry.

I know that success in the gaming industry is predominantly dependent on the audience opinion of the final product. The indie developer has a spate of successful titles like Overcooked and Golf with Your Friends, along with a lot of exciting planned releases.

The company supports a multi-console approach including developing games with the growing mobile gaming market in mind. The niche market is growing at an annual rate of 9.6% and TM17 is well set to capitalise.

The gaming sector remains highly competitive. The company recognises that the accelerated sales driven by the lockdown could taper in the coming months. Also, 12-month returns in the market are underwhelming at 1.74%, but since 2021, shares have risen 27%. I think the steady revenue figures and tested launch strategy makes TM17 one UK share I’d buy in September offering potentially explosive returns.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

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