Incredibly, we’re almost halfway through the year. It’s already been a pretty crazy ride, and we’re far from finished. Ahead, we have a general election, imminent interest rate cuts, the US presidential election and other events that could cause volatility.
The FTSE 100‘s done well so far, but here are some growth stocks I think will offer significant outperformance.
Time for a drink
For perspective, so far this year, the FTSE 100’s up 6.5%. This compares modestly to Coca-Cola HBC (LSE:CCH), which is up 18% over the same period of time. Over one year, the stock’s up 16%.
Some might be confused by the name, but this isn’t the Coca-Cola business. Rather, it’s a partner and is one of the largest bottlers of Coke in the world. Yet it also makes and sells a range of other drinks that aren’t associated with the famous soft drink.
It’s done well recently, thanks to both higher revenue and easing cost pressures. Lower inflation’s helped the business to deal with logistics and raw materials without putting huge extra costs on the bottom line. Yet it’s also benefitted from higher revenue, hitting £8.46bn in 2023 for the first time ever.
This growth’s exciting and with the backdrop of inflation easing further so far this year and no signals demand’s easing off, I think the stock could continue to do well.
A risk is that the continued purchase of similar businesses makes the overall group too big and disjointed. For example, earlier this year, it confirmed the purchase of an Irish vending-machine business.
Checking financial health
Another option is Experian (LSE:EXPN). The global data and technology company is one of the rising stars in the FTSE 100. Over the past six months, the stock’s up 15% (over the past year, this jumps to 26%).
It makes money from providing credit services and other related data fields to businesses and individuals. As such, the subscription revenue can build up quickly.
However, given that most of the costs are fixed, once the business reaches a sizeable scale, profits should jump. We’re now at a stage where we’re seeing this. Revenue for 2023 rose 7% and profit before tax increased 34%.
The record profit figure shows that the business is in a great place right now. I think this will continue, especially as both consumers and businesses are really focused on credit scores and related data. Managing finances well as we come out of the cost-of-living crisis is high on the agenda.
But I do need to be aware that there’s a limit on how large the firm can grow to. Unless it decides to pivot into a new area (eg financial advice) then it could hit a natural ceiling in coming years.
I like both ideas and am thinking about adding them to my portfolio.
