After months of doom, gloom, and pessimism, the FTSE 100 began 2023 with a 5% gain in little over a month, smashing its own all-time high. If the market truly has turned the corner, then now might be a fantastic time to pick up growth stocks before they get too expensive. Here are three that I’m eyeing up for superb returns in years to come.
Games Workshop
The miniature war games manufacturer Games Workshop (LSE: GAW) has seen superb year-on-year revenue growth in the last decade. Its total revenue from 2022 of £386m compares favourably with its total revenue from 2016 of £118m. And the company has an economic moat like few others with its Warhammer intellectual property.
I’ve been keeping tabs on the company since it announced a partnership with Amazon Prime Video to create a series for its streaming platform. A potential catalyst for further growth, perhaps?
The weight of A-list actor Henry Cavill is behind the new series. And I’d certainly like to be holding the stock if it bursts into the mainstream like other fantasy worlds such as Lord of the Rings or Game of Thrones have done. On the other hand, if the show doesn’t take off, then future growth might be underwhelming.
Microsoft
Microsoft Corporation (NASDAQ: MSFT) offers such a diverse range of products in hardware, software, cloud computing, and video games that it strike me as the most robust of the big tech stocks. And its total revenue went up 17.9% in 2021 and 17.5% in 2020 which puts it in line with the prized FAANG growth stocks.
The share price is still 23.2% down from all-time highs, too. So this might be a great entry point for a stock I can see holding for a long time.
What does the future look like for Microsoft? Well, I’ll keep my eyes peeled for how it incorporates its latest investment of $10bn in Chat-GPT. The potential for this AI software to provide quick and helpful answers might just help its Bing search engine pick away at Google’s dominant market share.
I am concerned that we may have already seen the best of the growth with this stock, however.
Croda
The speciality chemicals business Croda International Plc (LSE: CRDA) has enjoyed market-beating returns for years, yet it is currently 11% down from all-time highs. I think this could be a potentially attractive entry point for this growth stock.
The first half of 2022 went well with a 20.7% revenue increase to £1.13bn and a 32.1% operating profit increase to £288.6m. And this profit was driven by growth in all four areas of its business, which are Consumer Care, Life Sciences, Performance Technologies, and Industrial Chemicals. This is a strong sign of good management and positive future prospects.
The growth is expected to slow in the second half year, primarily as a result of “reduced COVID vaccine demand”. So it remains to be seen how much that will impact the share price in the short term and if this impressive performance can continue.
