November is here, with darker evenings and jumpers at the ready. It also means a fresh month to consider some new investments for my portfolio. With lots going on at the moment, ranging from a climate change summit to central bank meetings, here are some topical top growth shares that I think could be worthwhile.
Tackling climate issues
The COP26 summit is live in Glasgow. This UN climate change conference has received a lot of publicity, and rightly so. There’s a large push from governments and corporates towards taking action with regards to the planet. A lot of this revolves around reducing emissions and investing in cleaner energy going forward.
I think this is a theme that will continue to pick up pace. As a result, I’d look to invest in companies involved in this sector. For example, SSE. The energy company is investing heavily in renewable energy. In fact, the website homepage is currently dedicated to showcasing what will be the world’s largest offshore wind farm at Dogger Bank.
This growth share has seen its price rally 33% over the past year, a solid return. But I do need to be careful about high costs related to the wind farm projects. Dogger Bank is expected to cost £2bn in this financial year alone. This will eat into the balance sheet.
Another stock in this area is Greencoat UK wind. The group invests in UK wind farms that are producing income. Some might say that this is more of an income stock, given the dividend yield of 5%+. However, the share price tracks the net asset value (NAV) of the wind farms. I think that the existing portfolio could increase in value over time, which would increase the NAV. So although the share price is only up 4.75% over one year, I’d still earmark this as a potential top growth share for the future.
A risk with Greencoat is a potentially high valuation, with a current P/E ratio of 20.5.
Top growth shares in banking
Another theme in November is interest rate hikes. Tomorrow the US Federal Reserve meets, followed by the Bank of England on Thursday. It looks like the UK will raise interest rates, with the US signalling that a future interest rate hike is coming.
I’d consider buying top growth shares that could take advantage of rising rates. One example is NatWest Group. The group doesn’t just contain NatWest, but other retail banks including RBS and private banks such as Coutts. As a such, I think it’s a diversified way to get exposure to the banking industry.
Higher interest rates should help the group, as the margin made between lending money to clients and paying out on deposits should rise. NatWest shares are up 80% over the past year.
One risk with NatWest is that the majority of the client base is in the UK. With Covid-19 infection rates rising again, the recovery of the economy could stagnate into the winter. This could impact banking activity negatively.
Overall, I think the above three stocks could offer strong growth based on current events when looking to the future. I’m considering buying all three.
