2 beaten-up UK shares that could turn £2,000 into £4,300, according to City analysts

Edward Sheldon highlights two UK growth stocks that have considerable share price upside right now, according to analysts in the City.

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While many investors are piling into value stocks right now, I don’t think growth stocks should be ignored. Companies that are growing faster than average tend to be rewarded by the market, meaning that they can potentially deliver powerful gains for investors over time.

Here, I’m going to highlight two UK growth stocks that have substantial share price upside right now, according to City analysts. I own both of these stocks, and I’d be comfortable buying more shares in each at current levels.

Significant share price upside

Let’s start with online fast-fashion retailer Boohoo (LSE: BOO), which owns a number of popular brands including Boohoo, PrettyLittleThing, and Debenhams.

It currently trades at around 89p. However, analysts at Deutsche Bank have a 12-month price target of 230p. If Deutsche’s analysts are right, a £1,000 investment in BOO could grow to around £2,585 (ignoring trading commissions).

Like many other e-commerce retailers, Boohoo has experienced recent challenges. Costs have risen and supply chain issues have meant that the company has been unable to get goods to customers. As a result, the group has had to downgrade its growth forecasts. It now expects growth of 12-14% for the year ending 28 February 2022.

I’m convinced that the group has what it takes to bounce back however. Brand power remains strong. This is illustrated by the fact that on Instagram, Boohoo and PrettyLittleThing have 11m and 17.6m followers respectively. That compares to figures of 6.7m and 12.5m in September 2020.

Meanwhile, the group recently started production at its own factory in Leicester. This should help ease supply chain issues, and also help fix some of the ESG issues the company is facing.

I’ll point out that not all brokers are so bullish on Boohoo. Analysts at Barclays, for example, have an ‘underweight’ rating on the stock and a price target of 85p. They believe things could get worse before they get better.

I’m in Deutsche’s camp here however. With the stock currently trading on a forward-looking P/E ratio of less than 15 after a big fall over the last year, I see considerable share price upside here.

Growth star

Another UK stock that has plenty of upside, also according to the City, is GB Group (LSE: GBG). It’s a leading provider of identity management and fraud prevention solutions that counts the likes of HSBC and Betfair among its customers.

Its share price is currently around 581p. However, analysts at Barclays have a price target of 1,000p. That means that £1,000 invested could grow to about £1,720, if Barclays’ analysts are right (there’s no guarantee, of course).

GB Group has a great track record when it comes to growth. Over the last five financial years, revenue has climbed from £73m to £218m. I think the top line is likely to climb much higher in the years ahead, however. That’s because the company is well-placed to benefit from the growth of e-commerce, as well as the rising risk of digital fraud. For the year ending 31 March 2023, analysts expect revenue of £291m.

GB’s valuation does add risk to the investment case. At present, the forward-looking P/E ratio is about 27. If future growth is below investors’ expectations, the stock could underperform.

Overall however, I think the risk/reward here is attractive. With it down considerably over the last six months, I think it’s a good time to be buying.

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 assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in GB Group and boohoo group. The Motley Fool UK has recommended Barclays, HSBC Holdings, and boohoo 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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