I’m happy with the performance of my investment portfolio this year. Year to date, many stocks I own are up more than 50%. However, there are a few shares I regret not investing in. Here’s a look at one UK stock I wish I’d bought at the start of 2024.
A top UK growth stock
The stock I want to highlight today is Beeks Financial Cloud (LSE: BKS). It’s a small cloud computing/data company that serves the financial services industry.
Year to date, its share price is up a whopping 198%. That’s a little more than the return from Nvidia (which I hold), and more than twice the return from Rolls-Royce (which I don’t).
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Had I invested £5,000 in Beeks at the start of 2024, I’d now have around £15,000. That would have been a great result.
I missed the gains
What’s frustrating is that the stock came on to my radar in early February when it was trading near 140p. At the time, the company had just put out a very encouraging trading update and I wrote: “I am tempted to have a nibble here. I think this stock is going higher.”
Unfortunately, I never pulled the trigger and bought myself some shares. And since that update, the stock has surged to 295p.
Should I buy now?
Is it worth buying for my portfolio today?
Well, results have continued to be impressive. In October, Beeks told investors that for the year ended 30 June:
- Revenue increased 27% year on year to £28.5m
- Underlying profit before tax increased 68% to £3.9m
- Underlying diluted earnings per share rose 61% to 6.36p
It noted that over the 12-month period, it landed significant contract wins including a £5m contract with one of the world’s largest banking groups, and a £2.7m contract in aggregate over a five-year period with a Tier 1 investment manager.
And looking ahead, management said that the board was confident that this year’s results would be in line with its expectations, underpinned by high levels of recurring revenue, a strong pipeline, and a significant market opportunity.
Demand for our product is stronger than ever, fuelling a regular flow of new contract wins and extensions that offer long-term, recurring revenues.
CEO Gordon McArthur
So, it sounds like the business is firing on all cylinders right now, which is encouraging.
High valuation
The thing that concerns me, however, is that the valuation is now much higher than it was.
Back in February, the price-to-earnings (P/E) ratio was about 18. Now it’s about 39.
That doesn’t mean the stock can’t continue to perform. But it doesn’t leave any room for setbacks such as a slowdown in contract wins.
Another issue for me is profits have been up and down in recent years. I’d like to see a track record of consistent growth in profitability – this would give me more confidence in the investment case.
Given the high valuation and volatile profits, I’m going to keep Beeks on my watchlist for now. If the valuation comes down a little, I may get involved.
But for now, I think there are better opportunities for 2025 and beyond.
