In recent months, I’ve been hunting for growth stocks more than usual. Russia’s invasion of Ukraine, coupled with inflation data and other influences created a number of opportunities in the stock market, as well as risks. Some stocks fell considerably in February and March due to their perceived exposure to the geopolitical challenges.
It’s worth noting that growth stocks are not the core part of my portfolio. I favour passive income stocks and there are several reasons for this. High dividends can negate the current inflationary pressures. But also, inflation-related uncertainty and higher interest rates can undermine the potential of growth stocks. In other words, it-s a play-off between uncertain long-term growth or stocks promising (but not guaranteeing) a dividend now.
I’ve chosen these two stocks because I feel that they’ll benefit from market conditions and grow.
Spire Healthcare
The Spire Healthcare Group (LSE:SPI) is in a good position to benefit from record waiting lists in the UK. This FTSE 250 stock operates dozens of private hospitals and clinics across the country and demand for its services is rising. In England alone, there are now more than 6.1 million people waiting on elective procedures. There’s considerable political will to reduce the waiting list and I think private healthcare providers stand to profit.
Research by the Institute for Public Policy Research suggests that the pandemic prompted more people to purchase private health insurance or pay for treatment as the NHS struggled to keep up with demand.
In March, it announced a strong rise in annual profit, driven by “significant” demand for private treatment. Revenue for the year climbed above £1bn for the first time, with 20.3% growth year-on-year. Spire also said there may be further upside if Covid-19 prevalence reduces, leading to fewer cancellations and staff absences.
However, a resurgent virus could severely hamper operations and the company’s revenue.
The stock is currently trading at 226p a share, that’s up over the last two years, but considerably down on where it was two years ago.
National Express
National Express (LSE:NEX) has plenty of upside potential having suffered during the pandemic and in its aftermath. The stock is currently trading just above 232p a share. That’s considerably down on its year high of 337p per share and less than half of its pre-pandemic peak.
While National Express has demonstrated its resilience in coming through the pandemic, I believe it will grow amid inflationary pressure on consumers and the long-term impact of the green agenda. With current inflation levels, National Express represents a cost-efficient travel option. From my own experience, the coach operator can get you from London to Bristol on a Friday evening for 10% of the price of a train. As fuel prices increase, it seems likely that some people will swap car journeys for the coach.
I also think the firm will benefit from the move towards greener options as people ditch car journeys. The UK Climate Change Committee actually predicts that between 9% and 12% of car journeys will switch to bus journeys by 2030. Soaring fuel prices may accelerate this transition.
While it hedges fuel, high prices for the long term could impact margins. Meanwhile a resurgent Covid-19 could dent demand. I stopped using National Express when Covid hit Britain in 2020.
I’ve recently bought both of these stocks for my portfolio.
