2 UK shares to buy in September for explosive returns

With August drawing to a close, Suraj Radhakrishnan takes a look at two UK shares to buy now for his portfolio.

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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.

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.

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 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.

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