How I’d invest £20,000 in UK growth shares

Our writer explains how he would invest £20,000 in UK growth shares for his portfolio right now, highlighting the eight stocks he would buy.

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.

Business development to success and FTSE 100 250 350 growth concept.

Image source: Getty Images

I like to hold some growth stocks in my portfolio. If I had £20,000 to spend on UK growth shares right now, I would spread it equally across the eight companies below, giving me some diversification.

Digital future

I would pick three shares that would give me significant exposure to the growth of the digital economy, although each has a different role in it. First is software provider Idox. It had a challenging few years and saw revenues shrink not grow. Last year, though, both revenues and operating profit returned to growth. With its government customer base, I see substantial opportunities for the company in coming years. One risk is price competition from larger rivals hurting profit margins.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

I would also buy digital media group S4 Capital. The company plans to double its revenues and profits in a three-year period and has signed up blue chip clients such as BMW. By growing business with large clients, attracting new ones, and acquiring smaller agencies I think S4 could hit its growth targets. But rapid growth can add overhead costs. That may hurt profits.

I also think Computacenter could continue to benefit as customers upgrade their IT systems as part of a push to more digitalisation. It has deep experience and long-established customer relationships that could translate into ongoing revenue growth. One risk is that any economic downturn could lead to non-essential digital upgrades being suspended, hurting revenues and profits.

UK growth shares

I also like the growth strategies of a couple of companies with big ambitions.

One is instrument maker Judges Scientific. The shares have performed strongly lately but I think the company’s growth ambitions could propel it higher still. Its focus on applications where accuracy matters allows Judges to sustain premium pricing. As it gets bigger, it can benefit from economies of scale and a growing reputation. One risk is that competitors try to mimic its strong performance by bidding for the types of assets Judges has been buying at attractive valuations. That could slow revenue growth.

I also like kidney diagnostic specialist Renalytix. Its revenues remain small but I expect strong growth in coming years as a growing sales force increases the company’s installed user base across New York state in the US. One risk is the additional costs of the sales push hurting profit margins.

From pork to parkour

Selling pig meat is a growth business because demand is booming. Meat producer Cranswick recorded earnings per share growth of 11% last year. A dividend raise of 16% was the latest in a series of annual increases over more than three decades. But any sudden changes on export rules are a risk to revenues and profits.

Discount retailer B&M has found a winning formula selling well-known brands at keen prices. It has plenty of space to grow in the UK, which I expect to fuel higher profits in coming years. One risk is increased competition from online discounters. That could hurt revenue at B&M’s bricks-and-mortar operation.

Finally, I would buy JD Sports, which sells active sportswear for everything from football to parkour. Its first half results were the strongest ever. I see continued growth opportunities from the company’s aggressive international expansion. But competition in markets like the US could hurt the company’s profit margins.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Christopher Ruane owns shares in JD Sports, Renalytix and S4 Capital. The Motley Fool UK has recommended B&M European Value and Judges Scientific. 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

Buffett at the BRK AGM
Investing Articles

3 Warren Buffett techniques to build my wealth

Our writer shares a trio of Warren Buffett investing habits he hopes can help him build his own wealth.

Read more »

Futuristic front of NIO car in Norwegian showroom
Investing Articles

Down over 50%, is NIO stock the best EV pick right now?

NIO stock has dipped over 50% in the past year. Does this create the perfect opportunity to buy or are…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Aviva shares are in demand. Should I buy too?

Hargreaves Lansdown investors were piling into Aviva shares last week. This Fool is asking whether he should join the queue.

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

3 reasons why I think the IAG share price could rally this year

Jon Smith writes about how improving risk sentiment could help the IAG share price this year, but not without risks…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

A passive income stock I’ve bought to supercharge my wealth!

I think this UK dividend stock is one of the best to buy for healthy long-term passive income. Here's why…

Read more »

British Pennies on a Pound Note
Investing Articles

3 hot penny stocks I’m buying in June!

With their exciting growth potential, penny stocks can be great investments. I've found three to buy next month based on…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

2 green dividend shares I’d buy with £500

Jon Smith explains two dividend shares with a focus on renewable energy that have caught his eye at the moment.

Read more »

Young black woman walking in Central London for shopping
Investing Articles

Should I buy these cheap FTSE 100 shares before June?

Paul Summers considers whether he should add these cheap FTSE 100 stocks to his portfolio before their next updates.

Read more »