2 dirt-cheap growth shares I might buy in July!

Looking for growth shares to buy at bargain prices? Royston Wild runs the rule over two he’s considering for his own portfolio.

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m searching for the best growth shares to buy for my portfolio next month. And the following two — which are tipped to increase earnings by double-digit percentages over the short term — look like they could be too cheap to miss.

Here’s why they’re on my watchlist right now.

Central Asia Metals

Buying mining stocks like Central Asia Metals (LSE:CAML) has significant investment potential. Earnings can shake badly when economic conditions worsen, putting pressure on commodities prices. But the long-term outlook for base metals — and consequently for companies like this — remains bright.

This particular AIM share digs for copper, lead, and zinc in Kazakhstan and North Macedonia. Purchases of these metals are tipped to rocket over the next decade thanks to increasing urbanisation, growing renewable energy demand, and rising sales of electric vehicles (EVs).

City analysts are expecting Central Asia Metals’ profits to rise strongly from this point on. They predict a 27% bottom-line jump in 2024. A further 12% increase is forecast for next year, too.

These projections leave the company looking extremely cheap, too. Its shares trade on a price-to-earnings (P/E) ratio of 9.7 times. They also sport a price-to-earnings growth (PEG) multiple of 0.4.

A reminder that any reading below one indicates that a share may be undervalued.

As an added bonus, Central Asia Metals shares also offer great value in terms of predicted dividends. The yield here for 2024 comes in at an enormous 8.8%.

On the downside, the company lacks the scale of some of the FTSE 100‘s mega miners like Rio Tinto or Glencore. It only has two projects on its books, which leaves group profits more vulnerable to project disruption.

But given the excellent all-round value it offers, I still think it’s worth serious consideration right now.

Babcock International

Defence contractor Babcock International Group (LSE:BAB) is another share I believe offers tremendous value today.

Its forward P/E ratio currently stands at 12.7 times. While higher than the FTSE 100 and FTSE 250 averages, this reading reflects the strong outlook for defence spending as geopolitical tension rises.

I think a better idea is to compare Babcock’s multiple to those of other London-listed equipment suppliers. And on this basis, I believe the company — which provides support and training to British and international customers — looks pretty cheap.

Industry giant BAE Systems trades on a forward earnings multiple of 19.8 times, for example. Meanwhile, Avon Protection and QinetiQ deal on ratios of 30.8 times and 14.9 times, respectively.

Babcock provides services to multiple territories including the UK, Australia, Canada, France, and South Africa. Defence-related spending from these regions is recovering strongly from their post-Cold War lows and has much further to go.

This is why City analysts expect Babcock’s earnings to increase strongly for the foreseeable future. A 13% rise is tipped for this fiscal year (to March 2025), and another 14% jump is predicted for financial 2026.

Lumpy contract timings are a constant threat to earnings in the defence industry. But on balance, I believe Babcock looks in good shape to grow profits over the next several years, at least.

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.

Royston Wild has positions in Rio Tinto Group. The Motley Fool UK has recommended BAE Systems and QinetiQ 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.

More on Investing Articles

Investing Articles

This UK share has hiked dividends for 32 years – now its price has crashed 30%

Harvey Jones is tempted by a FTSE 100 stock with a stellar track record of dividend hikes. But he wonders…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Should I rush to buy CrowdStrike shares after a 23% fall?

Edward Sheldon has been looking for cybersecurity shares to buy for his portfolio. Should he pile into CrowdStrike after its…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

After crashing 50% and 41%, are these FTSE growth stocks now unmissable bargains?

Paul Summers looks at two FTSE growth stocks currently hated by the market. Might this be a wonderful contrarian opportunity?

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Is this 7%-yielding FTSE 100 dividend star still a bargain after a 34% price rise?

Despite its recent price rise, this FTSE 100 high-yield heavyweight still looks very undervalued to me, supported by strong earnings…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Should I invest today or wait for a stock market crash?

Does it make sense to keep buying shares or save cash for a stock market crash? Our writer thinks there's…

Read more »

Investing Articles

Is this the beginning of the end for the rising Nvidia share price?

Jon Smith explains why the Nvidia share price dropped sharply last week and talks through the key events coming up…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

£11,000 of Legal & General shares could make me £14,583 a year in passive income!

A high passive income can be generated from a much smaller investment in Legal & General shares if the dividends…

Read more »

British union jack flag and Parliament house at city of Westminster in the background
Investing Articles

2 of the widest moats in the FTSE 100

A durable competitive advantage is key to a good investment. And Stephen Wright thinks a couple of FTSE 100 firms…

Read more »