2 growth stocks I’m watching like a hawk!

This Fool likes the look of these two growth stocks as he sees plenty of long-term potential in them. Here he explains why.

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I’m looking to build out my portfolio with growth stocks. Two in particular have caught my attention.

I’m talking about JD Sports Fashion (LSE: JD) and Games Workshop (LSE: GAW). They’ve both offered investors incredible returns over the years. But I think they’ve got more to give. If I had the cash, I’d pick them up in May.

JD Sports Fashion

Let’s get the ball rolling with JD. In the last decade, the retail giant’s stock has climbed an impressive 597%. By comparison, that’s way more than the return of the FTSE 100 (20.5%).

That said, in the last 12 months, the JD share price has fallen 29.7%. I reckon now could be a smart time to snap up some shares.

Firstly, the stock looks good value. It’s trading on around 11 times forward earnings. That’s in line with the Footsie average.

On top of that, I’ve been impressed with the ground it’s made with its expansion plans. It opened 215 stores during the 53 weeks to 3 February. That’s part of its wider aim to expand further into Europe and the US.

Last year, revenue hit a record £10.1bn, a significant jump from the £3.2bn the company posted just five years earlier. That shows just how far the business has come in a short space of time.

JD issued a profit warning earlier this year which saw its share price plummet. As the cost-of-living crisis continues, the firm could continue to struggle.

But even though tough trading conditions may be an ongoing theme in the months ahead, over the long run, at their current price and with its plans for further growth in the attractive athleisure market, I reckon JD shares could be a smart addition to my portfolio.

Games Workshop

I also think Games Workshop is a fascinating stock. It’s a company that operates in a niche market and has incredible financial health.

In its industry, which is miniature wargames, Games Workshop is the leader by some distance. It has minimal competition. That’s what’s allowed it to provide such incredible returns to shareholders in the last decade.

This also means it has a strong balance sheet. It has no debt and plenty of cash. As such, it pays investors a 4.4% dividend yield that’s been steadily rising and on paper looks in good shape to continue to do so.

Over the last 10 years, the stock’s risen a whopping 1,591.2%. Even in the last five years, faced with the pandemic and tough trading conditions, its share price is still up 130.2%.

Today, Games Workshop shares trade on 22.6 times earnings. That could be seen as expensive. What’s more, while its share price has posted a strong performance, that’s not to say there haven’t been large bouts of volatility due to factors such as inflation harming sales.

However, its growth prospects along with its strong balance sheet and meaty yield make me bullish on the stock as a long-term investment. I already own shares. I’d be keen to top up.

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.

Charlie Keough has positions in Games Workshop Group Plc. The Motley Fool UK has recommended Games Workshop 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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