Every month, we ask our freelance writers to share their top ideas for growth stocks to buy with investors — here’s what they said for August!
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Big Yellow Group
What it does: Big Yellow is the largest UK provider of self-storage services.
By Christopher Ruane. In the dog days of summer with a potentially bleak economic winter ahead, what sort of shares offer me the prospect of growth but may also benefit from resilient demand?
One sector I like that fits that description is self-storage. People need to store things, and once they rent space they often hang onto it for years. Demand is unlikely to be badly affected even by a recession.
The UK market size lags far behind the US. I therefore see significant room for growth in the coming years and decades.
As market leader, Big Yellow Group (LSE: BYG) ought to be a prime beneficiary of that. In its most recent quarter, the company grew revenues 6.7% year on year. It continues to expand its estate and opened a new flagship site in London’s King’s Cross in June.
Competition in the sector is a risk to profitability. But I continue to see strong long-term growth prospects for Big Yellow.
Christopher Ruane does not own shares in Big Yellow Group.
Burberry
What it does: Burberry is a British luxury fashion house that is famous for its beige chequered pattern.
By John Fieldsend. After French luxury goods firm LVMH became Europe’s largest company earlier this year, I turned my attention to Burberry (LSE: BRBY), its closest rival on the FTSE 100.
CEO Jonathon Ackeroyd only took the reins late last year, and he is very keen to follow in the footsteps of the French firm. He wants to increase sales of £2.8bn up to £5bn in the coming years, which would offer good growth in the share price.
There’s plenty of shareholder value on offer, too. A near-3% dividend is matched by successive years of £400m buybacks.
The biggest challenge for Burberry will be to enter the higher-priced luxury market. The company has recently bumped up its prices and removed discounts to increase the perceived ‘luxury’ of its brand. Despite that, margins of less than 20% still lag behind its French rival at 25%.
Still, with increasing sales, especially in mainland China, I’m optimistic about the future of these shares and would buy in if I had spare cash.
John Fieldsend does not have a position in any of the stocks mentioned.
Experian
What it does: Experian is a global information services company engaged in data analytics and consumer credit reporting.
fool_stock_chart ticker=[LSE:EXPN]
By Matthew Dumigan. My top UK growth stock for August is Experian (LSE:EXPN), a highly cash-generative company with strong positions in growing markets.
In the long run, I expect demand for Experian’s data-driven solutions to continue rising thanks to the ongoing global digital transformation. As a world leader in global information services, I think the company is well positioned to reap the benefits here.
Moreover, despite unstable conditions, I believe the group’s business products are likely to become even more essential. After all, companies can’t risk abandoning identity, credit and fraud checks in today’s operating environment.
Beyond this there are exciting growth opportunities in Latin America. Experian’s presence here has already resulted in impressive growth, but the company still has plenty of opportunity to continue capitalising on a region undergoing major upgrades to its financial services sector. As such, I reckon now could be an ideal time for investors to consider buying shares.
Matthew Dumigan does not own shares in Experian.
Games Workshop
What it does: Games Workshop designs, manufactures and sells fantasy miniature soldiers for tabletop wargaming.
By Charlie Carman. Games Workshop (LSE:GAW) shares have outpaced the FTSE 250 by a considerable margin over the past five years. Positive recent results suggest there’s room for further share price growth.
In the latest financial year, the Warhammer retailer delivered a 13.5% revenue jump to £470.8m and increased pre-tax profits by 9% to £170.6m. What’s more, the company continues to design new miniature ranges and storylines, keeping both hobbyists and shareholders enthused.
Contract negotiations are ongoing for a blockbuster film and TV deal with Amazon. The plan to take the Warhammer 40,000 universe to Hollywood has the potential to cement the brand’s popularity and improve revenues further.
There’s a chance the deal could fall through, which could hurt the share price. After all, the stock isn’t cheap with a price-to-earnings ratio above 30. However, if all goes to plan, the potential rewards look attractive. If I had spare cash, I’d invest today.
Charlie Carman has positions in Amazon.
Sage
What it does: Sage is a provider of cloud-based accounting and payroll solutions with a focus on small- and medium-sized businesses.
By Edward Sheldon, CFA. I’ve selected Sage (LSE: SGE) as my top growth stock in August for several reasons.
One is that the company has a lot of momentum right now. Recently, it published strong results for the six-month period ended 31 March and raised its guidance for the full financial year.
On the back of these results, brokers have been raising their earnings forecasts and share price targets for the stock. JP Morgan, for example, just increased its price target from 860p to 1,110p.
Another reason is that there has been a lot of insider buying in recent months. This indicates that those within the company are confident about the future and expect the share price to rise.
Finally, I like the share price trend here. Right now, Sage shares are in a powerful uptrend. And in recent weeks, they have broken out of a ‘channel’ they were stuck in for around five years. This is very bullish, to my mind.
Of course, if technology shares lose their momentum, Sage could underperform.
In the long run, however, I think this growth stock is likely to do well.
Edward Sheldon owns shares in Sage
