One growth stock I’m glad I bought for my holdings is Howden Joinery Group (LSE: HWDN). Here’s why I’m considering adding some more shares soon.
A growth stock performing nicely so far
On paper, I’m up close to 6% based on when I purchased Howden shares. That is around 18 months ago. I’m fully expecting the share price to continue to head upwards in the longer term.
As I write, Howden shares are trading for 641p. At this time last year, they were trading for 521p, which is a 23% rise over a 12-month period. This short-term performance has been pleasing for me considering the market volatility at present.
I’m conscious that Howden could experience some shorter-term issues. Soaring inflation, rising interest rates, weakened demand, as well as a cost-of-living crisis could seriously hamper the business.
Rising costs for Howden could hurt profit margins. Plus, a cost-of-living crisis could see consumers not prioritising renovations including Howden’s award-winning kitchens. When you factor in supply chain issues, obtaining products and delivering them to customers, there are some credible risks here. All of these issues threaten to derail Howden’s performance and returns. So far, the share price looks unaffected to me.
Why I’m considering buying more shares
I’m a fan of Howden’s general market position, as well as its modus operandi as well as future prospects. It is a leading business in its space and is popular among both the trade and DIY customers it sells to. As a growth stock, the business could benefit from the surging demand for housing in the UK, its primary market. Demand is currently outstripping supply and housebuilders and the government are trying to address this. This rise in new builds could boost Howden and its performance.
Performance history and growth for Howden has been great. Although I understand past performance is not a guarantee of the future, I’m impressed. For example, the business has grown revenue and profit for the past two years in a row. All the while, it has steadily increased its presence and boosted market share too.
Moving on to the fundamentals, Howden shares already boost my passive income with a current dividend yield of 3.2%. I’m planning on reinvesting any payouts I receive. However, I’m conscious that dividends are never guaranteed and could be cut or cancelled at any time.
Finally, Howden shares still look well priced to me on a price-to-earnings ratio of 10. This is lower than the FTSE 100 average of 14.
Final thoughts
As you can probably tell, I’m a big fan of Howden as a business and as a growth stock. The shares have performed well for me so far and I expect my current positions to continue heading upwards and boosting my portfolio.
I believe that if market volatility and macroeconomic issues clear, Howden shares should soar further. For that reason, I’m going to add some more shares to my holdings now, at a lower price, before they take off. To paraphrase the great Warren Buffett, “Be greedy when others are fearful”. I’m taking heed of this advice and looking to capitalise on current volatility to boost my holdings.
