With stock markets moving around in unpredictable ways, a number of shares now look cheap to me. Here are a couple of UK growth shares I would consider buying for my portfolio today that I think look like good value.
Down three-quarters over the past year, the boohoo (LSE: BOO) share price has fallen hard.
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It could keep falling. After all, inflationary pressures continue to pose a threat to the company’s profit margins. While revenue last year grew 14%, pre-tax profit slumped an alarming 94%. Net cash of over a quarter of a billion pounds was almost wiped out — the company’s net cash at the end of February sat at just £1.3m.
But despite the challenges, I see opportunities here too. Last year was tough, but the company still posted double-digit revenue growth. It also remained profitable, albeit at sharply reduced levels. Investment in distribution centres should enable ongoing growth, while boohoo’s stable of cheap and cheerful brands could win new customers as shoppers tighten their belts.
I think the price fall reflects widespread investor concern about the risks here. boohoo’s management incentive schemes have made the company seem a bit less focused on shareholders than I would want. Despite that, the profitable company with a track record of growth looks cheap to me. I would consider buying more for my portfolio.
The other UK growth shares I would consider buying for my portfolio at the moment are those of retailer JD Sports (LSE: JD).
The shares have tumbled 32% over the past year. That could suggest that they were overvalued before, or the business is expected to perform much worse. But pre-tax headline profit for the last year, before exceptional items, is forecast at £940m. With a market capitalisation of less than £7bn, the company looks like good value to me.
Last week JD said the first 14 weeks of its current financial year saw sales growth of 5% compared to the prior year period on a like-for-like basis. The company has a long history of growing sales and I think its ongoing international expansion could help this continue. It does bring risks too, however. Building share in competitive markets like the US could hurt profit margins.
Yet I think the sell-off in JD Sports looks overdone. It is one of the UK growth shares I own in my portfolio. I see the current price weakness as a buying opportunity for me to add more.
UK growth shares to buy now
I already own both boohoo and JD thanks to what I see as their strong growth stories. But I continue to se the price of these growth stocks as attractive, so would consider buying more.