The Motley Fool

2 top growth stocks I’d buy in July

Finding growth stocks which offer excellent value for money is becoming increasingly difficult. Part of the reason for this is the high level of the FTSE 100, with UK shares now trading close to record highs. This means that while a number of companies may have strong growth prospects, the market has factored them into valuations.

However, even with this situation, there are some stocks which could soar in the long run. Here are two companies which seem to offer growth at a reasonable price at the present time.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Improving prospects

Reporting on Tuesday was tool and equipment rental company HSS Hire (LSE: HSS). It announced that underlying revenue in the second quarter of the year was marginally ahead of the prior year. It has seen an improving rental revenue trend due in part to it introducing a programme of sales initiatives. They have generally gained traction with target customers, and have been supported by the strength shown by the company’s Services business.

The cost reduction activities announced in May have progressed. The majority of them have now been implemented, with savings of £10m having been made. In tandem, the company’s new operating model has improved efficiencies, meaning less capital is required. This should help to free-up cash flow and lead to a leaner business model.

Looking ahead, HSS Hire is forecast to report a fall in earnings in the current year of 14%. While disappointing, it is due to follow this with growth of 85% next year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.2, which suggests that it may offer upside potential. With a strategy that is gaining traction and improving its business model, its long-term prospects appear to be bright.

Growth potential

Operating within the same sector as HSS Hire is Speedy Hire (LSE: SDY). It is forecast to report earnings growth of 28% in the current year, followed by further growth of 23% next year. This means it has a PEG ratio of only 0.7, which suggests its shares are relatively cheap at the present time.

Having such a wide margin of safety appears to be a requirement for new investors in the company. After all, its track record of growth has been rather volatile. In the last five years its profitability has swung significantly, which means there may be a higher chance of downgrades to its earnings outlook. Therefore, a wide margin of safety provided by a low valuation could allow for substantial capital growth in the long run – even if the company’s performance fails to meet expectations.

As well as its growth appeal, Speedy Hire also offers a fast-growing dividend. Payouts are expected to rise by 44% over the next two years, while still being covered 2.7 times by profit. As such, even with a relatively low yield of 2.5%, the stock could have income appeal.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.