3 growth stocks I’d buy to capitalise on long-term trends!

Growth stocks have generally been on a downward track over the past year, albeit with an upturn in recent months. But here’s three I’m backing to soar.

| 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.

Light bulb with growing tree.

Image source: Getty Images

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.

Growth stocks are companies that one expects will outperform the market. When I started investing, I was far too preoccupied with growth stocks, and with trying to pick future winners in biotech and other fields. But nowadays, growth stocks represent a small part of my portfolio. Instead, I generally prefer investing in more stable value and dividend stocks.

But today I am looking a growth stocks. Specifically, ones that I think that will benefit from a range of global trends.

Hargreaves Lansdown

Perhaps it’s not as exciting as biotechs and EVs, but I see Hargreaves Lansdown (LSE:HL) being a big winner as investors increasingly take control of their own investments. According to Lloyds, around one in 10 Britons started investing during the pandemic.

This meant that 2020/21 was a bumper year for the Bristol-based financial services firm, which is essentially a supermarket platform for stocks and funds. In its most recent report, Hargreaves highlighted that it was continuing to grow its client base, which now numbers more than 1.7m.

There might be a short-term slowdown as the cost-of-living crisis bites, but I see the long-term trends as being very positive for Hargreaves. It also pays a healthy 4% dividend right now, which is not what I’d expect from a conventional growth stock.

Sociedad Química y Minera de Chile

Sociedad Química y Minera de Chile (NYSE:SQM) is one of the world’s biggest lithium mining stocks. It has been going from strength to strength over the past 18 months, but particularly this year as lithium prices spiked.

The Chile-based company has a 25% share of the global lithium market with 20+ years of reserves. It’s also fairly low cost in comparison to peers. SQM is looking to increase lithium carbonate equivalent capacity by 30% annually until 2025. This should cement its place as a global leader.

Lithium is widely used in the production of batteries used in EVs and other technologies. It’s clearly much in demand as we move away from fossil fuels.

But I’m not buying just yet. This year, lithium prices have gone from $10,000 per tonne to nearly $68,000 today, but it’s predicted to fall to $16,000 next year amid recession fears. So, while I’m bullish on the long-term prospects, I think there’ll be better opportunities to buy in the coming months.

Ceres Power

Ceres Power (LSE:CWR) is a world leader in fuel cells and hydrogen power. And 2022 could be a big year for Ceres. It has lucrative partnerships with Bosch and Doosan Fuel Cell, with the latter looking to soft-launch its first product this year.

Ceres is debt-free, and has £245m in cash. It’s got a cash runway of about 7.6 years, having only burned £32m over the past 12 months. It also doesn’t manufacture its own products, which removes some of the need for huge sums of capital expense.

There’s clearly no guarantee that Ceres’s tech will be the next big winner, but I’m confident it will be part of the future of energy generation and transport. With the share price down 32% over the past 12 months, I’d buy now.

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 Hargreaves Lansdown and Lloyds. The Motley Fool UK has recommended Hargreaves Lansdown and Lloyds Banking 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.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

1 Warren Buffett stock I’m buying now

Coca-Cola is the fourth-largest holding in Warren Buffett’s Berkshire Hathaway. I’ll explain why I’m following Buffett and buying more.

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

I bought 4,403 Lloyds shares in June and 4,856 in September. Here’s what they’re worth now

Harvey Jones thought he was bagging a FTSE 100 bargain when he bought Lloyds shares on two occasions last year.…

Read more »

Young woman holding up three fingers
Investing Articles

I’m itching to buy these 3 hidden FTSE gems in a Stocks and Shares ISA

Harvey Jones is keen to add these three FTSE 100 companies to his Stocks and Shares ISA before April. Only…

Read more »

Close up of a group of friends enjoying a movie in the cinema
Investing Articles

How I’d try and turn just £1 a day into a fabulous £54,485 passive income for life

By investing small, regular sums in FTSE 100 shares I can potentially generate a huge passive income stream. It won't…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’d aim for a million buying under a dozen shares

Christopher Ruane explains why less could be more when it comes to building a share portfolio if he wants to…

Read more »

Investing Articles

Rolls-Royce shares are up over 1,000% since 2020! Am I too late to buy?

Rolls-Royce shares now cost over tenfold what they did in the firm's 2020 rights issue. Our writer thinks they may…

Read more »

Investing Articles

1 top UK growth stock for my tech portfolio in 2024

Up 30% in just one year, this growth stock looks positioned to continue on the path of substantial gains, according…

Read more »

Buffett at the BRK AGM
Investing Articles

I’d follow Warren Buffett to target effortless passive income

Warren Buffett knows a thing or two about building passive income streams. By learning from the Sage of Omaha, so…

Read more »