Here are two top UK growth and value stocks I’m looking to buy when I have spare cash to invest.
Spire Healthcare
Chronic underfunding in the NHS has led to an explosion in waiting lists. It’s why I’ve opened a position in private hospital operator Spire Healthcare (LSE:SPI) and plan to buy more.
Research from the Private Healthcare Information Network shows that a record 272,000 patients funded medical treatment themselves last year. The number of people receiving care through insurance policies is also booming as NHS waiting lists grow. Latest data showed a record 7.33m people awaiting state-funded treatment.
Spire — which owns 39 hospitals and 33 clinics across the country — continues to make solid progress against this backdrop. It said this month its “good momentum” has continued since the end of last year. In 2022, the business saw revenues rise 8.3% to £1.2bn, while adjusted operating profit leapt 30.2% year on year to £105.6m.
Staff shortages and the upward pressure this is placing on wages is affecting profits here. But price rises, along with a favourable treatment mix and cost savings, mean the business keeps making exceptional progress when it comes to margins. Its adjusted EBITDA margin improved 90 basis points last year to 17%.
City analysts expect annual earnings to rise 48% in 2023. They predict bottom-line rises of 61% and 33% too, in 2024 and 2025 respectively, as the NHS patient exodus continues.
And these predictions leave Spire trading on a forward price-to-earnings growth (PEG) ratio of just 0.8. Any reading below 1 suggests a stock is undervalued.
Redcentric
Purchasing tech stocks could be another good idea as the pivot towards flexible working gathers pace. Redcentric (LSE:RCN) is one such London-listed company on my radar.
Employee demands for an improved work/life balance have soared since Covid. And huge labour shortages across the West mean that businesses are having to bend to worker demands, including working from home.
Lawmakers are taking steps to help workers stay away from the office too. In the UK, for example, The Employment Relations (Flexible Working) Bill that’s going through parliament will allow people to request flexible working from Day One of their employment.
This all bodes well for Redcentric. The business provides cloud computing services that allow workers to access, manage and share project data from anywhere. It also provides expertise in cyber security, communications and other areas critical for effective and safe flexible working. This helped revenues rise 52% in the last financial year (to March) to $141.8m.
Smaller operators like this face huge competition from industry giants such as Microsoft. But the exceptional progress it has made so far still makes it an attractive stock to own, in my opinion.
Analysts expect annual earnings here to rise 96% in financial 2024. This leaves the tech firm trading on a PEG ratio of just 0.1.
