Are Purplebricks plc, Sirius Minerals plc and boohoo.com plc THE best growth stocks for your ISA?

Should you stuff your ISA portfolio with fast-growing Purplebricks plc (LON:PURP), Sirius Minerals plc (LON:SXX) and boohoo.com plc (LON:BOO)?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Buying shares in small companies with excellent potential can be an incredibly rewarding long-term strategy. Holding these kind of shares in an ISA would be even better, since any capital gains or income won’t be taxed.  

With this in mind, let’s look at three hot growth stocks and ask whether you should make room for them in your portfolio.

Purple patch

Online estate agent Purplebricks (LSE: PURP) announced its first set of annual results this morning. Group revenues were up 448% (£18.6m) and gross profits rose by a 427%. The company sold £2.8bn of property in the last 12 months and visits to its website grew to 1.23m by April from 0.4m the previous year.

Much of Purplebricks’s appeal lies in its disruptive business model. In contrast to traditional agents charging a percentage of a property’s sale value, sellers pay a fixed fee for all marketing and administration. Instead of having its own agents, the company offers a flexible service using Local Property Experts (LPEs) who are able to work any day of the week and in the evenings. LPE recruitment is now ahead of plan and increased by 159% over the past year.

Although more established players are starting to adapt, Purplebricks is arguably streets ahead and is now looking to launch in Australia. Unsurprisingly, this advantage (and the potential for massive returns) is factored into the company’s vertigo-inducing valuation. It could be argued that there is far more chance of it disappointing shareholders and the market than succeeding. Then again, wasn’t the same thing said about ASOS and ARM Holdings?

Time to get serious?

Despite the odd bit of director dealing and updates about preferred contractors, fertilizer-producer, Sirius Minerals (LSE: SXX) hasn’t provided the market with much to feed on since the publication of the report from its definitive feasibility study in March.

This situation could change dramatically with confirmation that its harbour facilities have been approved and an announcement relating to the funding of the actual mine. Investors will be focusing on the AGM on June 24 (yes, the day after the EU referendum vote) and hoping for news from CEO, Chris Fraser.

Although a lot of work is clearly going on behind closed doors and the investment case has looked more positive in recent months, let’s be clear —  this is no ‘safe’ and dependable FTSE 100 stock (for now). Even just the suggestion that the board is struggling to raise funding for the mine could see the shares plummet.

As a current shareholder with retirement a few decades away, I’m willing to endure the roller-coaster ride ahead. However, Sirius forms only a small part of my diversified ISA portfolio — and for good reason.

Giving investors cheer

Before this week, boohoo.com (LSE: BOO) had been making its investors very happy indeed. A strong and sustained rise in the share price was further boosted by last week’s trading update. Revenue has jumped by 41% and overall gross margin is up 56%. The company now has 4.2 million active customers, a 30% increase on last year and expects sales growth of 25-30% for the financial year. The £61m cash on its balance sheet is also encouraging.

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.

Paul Summers owns shares in Sirius Minerals and boohoo.com. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »