2 FTSE growth stocks I’d put £1,000 in today

These FTSE growth stocks have been hit hard during the 2022 correction. But the latest figures suggest better times are on the horizon.

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There are some terrific FTSE growth stocks listed on the London Exchange. And thanks to the ongoing economic uncertainty, most are trading at relatively cheap prices.

That includes the companies that are seemingly chugging along nicely, despite what the lacklustre share price performance would suggest.

For investors fortunate to have lump sums to invest right now, here are two enterprises from my portfolio that look like solid buying opportunities, in my eyes.

Video games aren’t going away

For years, Keywords Studios (LSE:KWS) was a gaming darling. The talent services firm was a picks-and-shovels approach to investing in the high-growth industry without taking on excessive risk.

The main problem with investing directly in game development studios is the financial damage that a title flop can cause. After all, creating a video game isn’t cheap. And if gamer expectations aren’t met, it can sometimes lead to the demise of an entire studio.

But with Keywords, that’s not the case since the group gets paid regardless of the critical reception.

Even in 2023, demand for video games remains robust. Or at least that’s what the group’s double-digit sales growth and profit margins would suggest. And yet the stock is down over 40% since the start of the year! What’s going on?

There’s no clear single explanation behind this downward pressure. Having traded at a lofty premium for years, such volatility isn’t too surprising.

However, from what I can tell, investors are getting increasingly nervous about artificial intelligence (AI). With generative AI models stealing headlines, there are some valid concerns that the group’s business model could be disrupted.

However, personally, I think people may be jumping the gun. AI has been used in video game development for over a decade. In fact, Keywords owns some of the biggest related tools in the industry, such as Yokozuna Data and KantanAI.

And with management still actively investing in this space, the company appears to be making the right moves to adapt and capitalise on the technological shift. That’s why, despite the overall pessimism, I remain optimistic about the long-term potential of this business.

Digital ads’ winter is thawing

Like many industries, digital advertising is cyclical. With the explosive rise of e-commerce following pandemic lockdowns, dotDigital (LSE:DOTD) saw its growth explode in a few short months. Inevitably, the momentum came grinding to a halt when inflation began to rear its ugly head. And with it, the stock price tanked.

Shares are down 70% since its September 2021 peak as growth evaporated, from high double-digits to low-singles. Much like Keywords, the company carried quite a lofty valuation, laying the foundation for such levels of volatility.

But the latest trading update shows that growth seems to be steadily creeping back in. And as businesses steadily ramp up their advertising budgets, sales and earnings are rising once again.

The group still has to contend with fierce competition. And many of its rivals are far larger, such as Intuit, following its acquisition of Mailchimp.

Yet rising average revenue per customer indicates that dotDigital is proving its value to clients. And at a P/E ratio of 23, the stock looks like it’s trading at a more sensible valuation to bolster my existing position.

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.

Zaven Boyrazian has positions in Dotdigital Group Plc and Keywords Studios Plc. The Motley Fool UK has recommended Dotdigital Group Plc. 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.

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