2 slam-dunk growth stocks I’ve got my eye on for July

Our writer is looking to snap up these growth stocks when she next has some available funds. She explains her investment case.

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Some established businesses with solid brand power, reach, and a good track record are still exciting growth stocks, in my view.

Two I’ve got my eye on are Coca-Cola HBC (LSE: CCH) and Kainos Group (LSE: KNOS). Here’s why!

Coca-Cola HBC

You’d be forgiven for thinking this is the drinks giant that many love, including me. The business in question is in fact a strategic partner that is one of the largest bottling firms for the popular brand. Plus, it also produces and distributes other soft-drinks.

Economic turbulence is a worry for me. When inflation was out of control some time ago, higher costs were a worry for firms like Coca-Cola HBC. This is because margins become tighter, and earnings and returns are impacted. We’re not out of the woods yet when it comes to inflation, so I’ll keep an eye on this.

However, when I factor in the sheer brand power of Coca-Cola, as well as Coca-Cola HBC’s track record, reach, and passive income opportunity, I’m hard pressed to ignore the stock.

For example, in 2023, the firm hit its highest ever revenue figure, £8.46bn, to be exact. This growth is pleasing to see. I can see this positive momentum continuing too. I could probably count on one hand the number of places across this planet that don’t have access to Coca-Cola, or know the brand name.

Next, the shares currently offer a dividend yield of 2.9%. I can see this growing too, in line with the business. However, I do understand that dividends are never guaranteed.

Finally, the shares aren’t expensive, in my eyes. They trade on a price-to-earnings ratio of just 12.

Kainos

Moving away from consumer goods and towards tech, Kainos is a UK-based business specialising in software implementation. I’m particularly drawn to its Workday segment, which is a hugely popular software many firms across the world are implementing.

From a growth perspective, there’s lots to like about the business. Three specific aspects excite me. Firstly, its expertise in implementing Workday solutions could be huge, and a real money spinner to boost earnings and returns.

The other is the firm’s drive to utilise and implement artificial intelligence (AI). The recent hype – and potential real world applications of AI – could also boost earnings and returns.

Lastly, the business is smaller than competitors such as Softcat. This tells me there is more room for it to grow and mature. Buying shares now could be a savvy move, to potentially cash in on the journey ahead.

Looking at the bear case, this same use of AI for growth today could be an issue tomorrow. What if the same AI that Kainos is implementing could replace the need for its services? There’s a chance this could happen, and in turn, dent earnings and returns. I’d keep an eye on this.

Finally, Kainos shares would also offer me a passive income opportunity, and offer a dividend yield of 2.5%. Like Coca-Cola HBC, I can see this growing too.

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Kainos 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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