I think these could be amongst the best growth stocks for me to buy for the rest of the decade. Here’s why I’d snap them up today.
CVS Group
What it does: offers veterinary care services through its UK network of 500 surgeries.
Price: £17.38 per share
CVS Group (LSE: CVSG) is a healthcare stock I snapped up in early 2020. It’s one I’d been considering buying for some time as consumer spending on animalcare grew strongly. Soaring pet adoption rates during the Covid-19 crisis encouraged me to build my holdings in the business, too.
The CVS share price has been volatile more recently. And this means the decision to boost my holdings late year hasn’t paid off yet. Still, the vet care provider remains more expensive that it did back in February 2020. So I’m still up by the tune of around 15%.
I continue to believe that CVS will prove a lucrative stock for me to own over the long term, too. This is because pet adoption rates remain rock solid.
As Matt Britzman, equity analyst at Hargreaves Lansdown, has commented: “the UK pet market’s grown 4% per year on a compound basis over the past 5 years and continues to look strong as the pandemic fuelled surge in pet ownership doesn’t look to be going anywhere.”
A safe haven in tough times
I think CVS Group in particular is a good pet-themed stock to own at the current time as well. Animal owners might cut down on discretionary items like toys as the cost of living crisis worsens. But spending on their pets’ health is unlikely to be something they cut back on.
This explains why City analysts expect CVS to continue growing earnings in the short-to-medium term. They expect the company to follow an 8% improvement in annual earnings in the outgoing financial year (to June 2022) with a 6% rise next year.
I am concerned by the growing shortage of veterinary staff in UK. This threatens to push up costs for animalcare specialists like CVS. But on balance I think the potential rewards of owning this top growth stock outweigh the risks.
Redcentric
What it does: provides a range of IT services to businesses.
Price: 121.8p per share
Redcentric (LSE: RCN) is a growth stock I’m considering adding to my portfolio as remote working becomes the norm.
The number of people working away from the office famously boomed during the Covid-19 pandemic. And demand for a blend of home- and workplace-based employment to continue permanently is growing in strength.
According to Barnett Waddingham, some 84% of British businesses have now adopted a ‘hybrid’ working method. Dissatisfaction over flexible working practices was a major reason behind staff resignations over the past year, the consultancy said, illustrating the importance of remote working amongst modern workers.
This bodes well for firms like Redcentric, which can expect demand for their services to rise. This particular IT services business provides networks, security software, cloud platforms and communications systems, which allow workers to complete their tasks efficiently and safely.
Business is booming
Redcentric saw revenues edge 2% higher in the last financial year (to March 2022). Encouragingly, however, the company said that new sales orders “improved significantly” during the final half of the year versus the first six months.
City analysts think Redcentric’s earnings will rise 16% year-on-year in FY2023. This leaves the company trading on what I consider to be an undemanding forward price-to-earnings (P/E) ratio of 14.8 times.
Redcentric doesn’t have the financial clout of the IT industry’s big beasts like Microsoft, IBM and Oracle, to name just a few. It also doesn’t have the brand recognition of these global giants. But I still think it could deliver exceptional investor returns for me over the next decade as its market opportunities grow.
Begbies Traynor Group
What it does: provides a range of services to financially troubled businesses.
Price: 138p per share
I’m considering bulking up my exposure to counter-cyclical UK shares as the economy stalls. It’s a strategy that could limit the impact of worsening conditions on my portfolio.
One way I’m considering doing this is by investing in insolvency practitioner Begbies Traynor Group (LSE: BEG). This is a growth stock that supplies a broad spectrum of services for struggling companies like helping with debt restructuring, asset sales and contingency planning.
New research from accountancy firm BDO suggests a fresh storm is on the horizon for British companies. It says that “almost a fifth say record inflation and the cost of living crisis has or will have a worse impact on their business than Covid-19.”
This is, of course, extremely worrying given the huge number of companies that went to the wall during the pandemic. Indeed, insolvency rates are already rocketing in the UK, and there were 1,991 in April. That was more than double the number of insolvencies recorded a year earlier (925).
Expanding for growth
Begbies Traynor said last month that it expects revenues to have leapt 30% in the financial year to ApriI 2022. And it looks like sales should keep rising strongly over the short to medium term.
But I don’t buy UK shares based on what near-term returns I can expect to make. In the case of Begbies Traynor, I reckon I could make big money over the long term as it continues on its acquisition-led growth strategy.
M&A can throw up unexpected risks that can damage profits and shareholder returns. But so far the company’s successful approach to acquisitions has kept earnings growing solidly year after year. And City analysts are predicting further bottom-line growth of 8% and 3% for fiscal 2023 and 2024, too.
Today, Begbies Traynor trades on a forward P/E ratio of 14.4 times. I think this is a bargain considering the firm’s terrific pedigree of annual earnings growth.
