2 top growth stocks to buy in May

These are two of the best growth stocks I’m considering for my portfolio this May. I’m confident both have plenty of upside potential.

| More on:

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.

Arrow symbol glowing amid black arrow symbols on black background.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

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.

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.

James Fox owns shares in National Express and Spire Healthcare. The Motley Fool UK has no position in any of the shares mentioned. 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

Finger clicking a button marked 'Buy' on a keyboard
Investing Articles

Analysts have upgraded this FTSE 100 stock to Buy. What should investors do?

Associated British Foods shares have been uninspiring for some time. But is it finally time to consider buying the FTSE…

Read more »

Man changing battery on electric bicycle
Investing Articles

Prediction: in 12 months the sizzling National Grid share price could turn £10,000 into…

It's been another solid year for the National Grid share price and the dividend yield is decent too. So why…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

Up 185% in 3 years, why does the market love this FTSE 250 stock

Over the past three years, this stock has vastly outperformed the FTSE 250. Dr James Fox takes a closer look…

Read more »

A handsome mature bald bearded black man in a sunglasses and a fashionable blue or teal costume with a tie is standing in front of a wall made of striped wooden timbers and fastening a suit button
Investing Articles

Looking for growth, dividends, or value? These 3 ETFs could be smart ideas to consider

Exchange-traded funds (ETFs) provide a way for investors to spread risk without sacrificing the possibility of huge long-term returns.

Read more »

Happy couple showing relief at news
Investing Articles

Is the Rolls-Royce share price fast becoming a joke?

The FTSE 100 engineering titan has done brilliantly in recent years. But our writer wonders whether the Rolls-Royce share price…

Read more »

Middle-aged white male courier delivering boxes to young black lady
Investing Articles

Is there a ‘best age’ to start buying shares?

Christopher Ruane weighs some possible pros and cons of waiting to start buying shares for the first time, versus starting…

Read more »

piggy bank, searching with binoculars
Investing Articles

Is it time to look again at the FTSE 250’s worst performers?

Our writer considers the prospects for two of the worst-performing shares on the FTSE 250, with falls of at least…

Read more »

A handsome mature bald bearded black man in a sunglasses and a fashionable blue or teal costume with a tie is standing in front of a wall made of striped wooden timbers and fastening a suit button
Investing For Beginners

Down over 40% in the past year, I think investors should consider these value shares

Jon Smith points out two value shares that have fallen heavily over the past year but are starting to look…

Read more »