The London stock market’s enjoyed some impressive gains in 2024. But years of underperformance mean it’s still packed with top growth shares trading far too cheaply.
Here are three of my favourites:
| Company | Predicted earnings growth this year | Forward price-to-earnings (P/E) ratio | Forward price-to-earnings growth (PEG) ratio |
|---|---|---|---|
| Serabi Gold (LSE:SRB) | 174% | 3.8 times | < 0.1 |
| H&T Group (LSE:HAT) | 15% | 6.9 times | 0.5 |
| ITV (LSE:ITV) | 17% | 8.9 times | 0.5 |
As you can see, each trades on a rock-bottom P/E ratio and PEG multiple. A reminder that a PEG below 1 indicates a stock’s undervalued.
City brokers think these shares will deliver impressive near-term profits growth. I’m confident their bottom lines will grow rapidly over the long term too.
Here’s why I think they’re top stocks to consider.
Gold rush
Serabi Gold’s one of many gold miners whose profits are tipped to rocket this year. Yellow metal prices have just hit record highs above $2,500 an ounce. Encouragingly, many gold analysts think further gains are coming, as interest rates reverse and the geopolitical landscape worsens.
This isn’t the whole story with Serabi however. This particular miner — which has assets in Brazil — is benefitting from rising production as it ramps up activity at its Coringa mine.
The Alternative Investment Market (AIM) business couldn’t have picked a better time to increase output. And, pleasingly, production from Coringa’s set to keep rising all the way to 2026 too.
Metals mining’s an unpredictable business and profits-sapping production problems can be common. However, I believe this threat’s more than baked into Serabi’s sub-1 P/E ratio.
A top stock for tough times
Pawnbroker H&T Group will also benefit if gold prices continue appreciating. The business already looks set to continue performing strongly as the UK economy splutters.
Revenues and pre-tax profits here rose 11% and 12.5% respectively in January to June, as people pawned their goods to raise cash. The company’s pledge lending rose 14% in the period as well.
H&T’s rapidly expanding to capitalise on these favourable near-term conditions, and to deliver solid growth further out. It added eight new stores to its estate in the first half to take the total number of outlets to 281.
Profits could suffer if industry regulations change later down the line. But today, things are still looking good for the AIM firm.
Spectacular value
Commercial broadcaster ITV’s vulnerable to a fresh downturn in the advertising market. But with marketing spending improving — ad revenues here rose 10% in the first half — even risk-averse investors might want to consider opening a position.
This is a growth share that offers exceptional value, in my opinion. As well as carrying those ultra-low P/E and PEG ratios, ITV shares offer an extra bonus in a 6.2% forward dividend yield.
I think the FTSE 250 company has excellent long-term investment potential. Through its ITVX platform, it’s making brilliant progress in the fast-growing streaming segment.
With Hollywood strikes over and the ad market improving, sales at ITV Studios should also start growing strongly again. Annual organic revenues are tipped to grow 5% on average between 2021 to 2026, ahead of the broader market.
