We’ve had a market dip recently and some high-quality stocks look more attractive than they did a few weeks ago. Without further ado, here are my top two growth shares to consider buying in 2025.
Ashtead Technology
First up is Ashtead Technology (LSE: AT.). This is an AIM-listed subsea equipment rental firm that serves both the offshore renewables and oil and gas sectors.
Shares are up more than 200% since listing in late 2021. However, they’re down around 41% in the past five months, which I believe offers a potentially attractive entry point.
The slump came after the company’s H1 report in September. In this, revenue surged 61.4% year on year to £80.5m, with adjusted earnings per share (EPS) increasing 36% to 19.1p. Solid stuff.
However, the adjusted EBITDA margin contracted from 42.4% to 39%, while the company’s capital expenditure (capex) doubled to £16.4m. Capex is expected to increase to £30m for the full year.
There’s a risk that Ashtead Technology’s profitability might take a bit of a hit in the near term as it invests in acquisitions, extra sales teams, and new rental equipment. Potentially bad acquisitions also add risk.
As a shareholder though, I’m happy for the business to be investing in future growth opportunities. And these seem plentiful, as its total addressable market is forecast to reach $3.5bn by 2027, with offshore wind growing at 23% annually.
In summary, Ashtead Technology is a small but profitable £415m company that is is well-positioned to capitalise on strong demand in both renewables and oil and gas. With the stock trading at just 11.3 times next year’s forecast earnings, I think it’s well worth considering.
MercadoLibre
In contrast, MercadoLibre (NASDAQ: MELI) is no minnow. Founded in 1999, it’s now an $87bn juggernaut that runs the largest e-commerce marketplace across 18 countries in Latin America. It also owns a leading fintech platform and logistics operation.
The firm is often referred to as the ‘Amazon/Paypal of Latin America’. It’s benefitted massively from rising income levels and smartphone penetration rates across the region.
In the past two months however, the share price has dipped around 20% due to concerns about its push into consumer credit (it’s applied for a banking licence in Mexico). The risk is that the expansion of its credit card business opens up the risk of bad loans and this could weigh on profitability.
That’s the glass half-full view. Personally though, I think this massive opportunity is worth pursuing, as around 70% of Latin America’s population is still unbanked or underbanked, according to the World Bank.
Between 2013 to 2023, MercadoLibre grew its revenue at a compound annual growth rate (CAGR) of 41% in US dollar terms! Growth obviously won’t continue at that rate forever, but the company reckons its best days are still ahead of it.
Looking at the numbers, that may well be true. That’s because while the company serves 87m active buyers, Latin America’s population is projected to hit 700m by 2030.
Moreover, this population is young and internet-savvy, which is a fantastic backdrop for a leading e-commerce and digital payments firm.
Analysts expect net profit to grow at a CAGR of around 48% between 2023 and 2026. That puts the stock at a very reasonable 28 times earnings by 2026.
