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About to buy Sirius Minerals? Consider these proven growth stocks first

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The appeal of Sirius Minerals (LSE: SXX) is obvious. A home-grown miner with access to vast, untapped deposits and a steadily growing global population that demands ever greater volumes of fertiliser. However, with its product far from proven to be commercially viable and costs already rising, I’d recommend investors also take a look at some more proven growth heroes.

A rare AIM success story 

One that’s at the top of many lists is online fast fashion pioneer ASOS (LSE: ASC). From humble beginnings, the AIM-listed company now has a market cap over £4.8bn, has turned an £1,000 investment into more than £200,000 over the years, and is still growing sales and profits by double-digits.

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In the four months to June, the group’s constant currency revenue rose 21% to £823.9m as it gained market share in key markets such as the UK via bringing in new customers, getting old customers to order more frequently, and to increase the average spend of all customers.

Over the longer term, I see good potential for this level of growth to continue as the group cements its leading position in the UK and invests in growth areas such as the US and EU. Furthermore, as one of the biggest players in its market with a net cash position and growing gross margins, ASOS is in a better position than rivals to invest in long-term growth by building up its already extensive distribution and logistics facilities.

At its current price of 60x forward earnings, it is not a cheap stock by any stretch of the imagination. But with a huge lead over smaller competitors, great brand recognition, fantastic growth opportunities overseas, and the option to dial back capital investments to juice profits, the group warrants this lofty valuation in my eyes.  

Profiting from its data trove

Another AIM business generating amazing returns for investors is YouGov (LSE: YOU). The group is best known for its political polling work but now makes fully half of its revenues from its higher-margin data products and services, selling access to its reams of data on consumer thoughts and behaviours.

In the half year to January, particularly strong growth from this division led to group-wide revenue rising 12% in constant currency terms to £56.3m. Befitting its move towards higher-margin work, statutory operating profits for the period jumped 78% to £4.4m.

Rising profits and a strong net cash position of £21.3m at period-end mean the business has plenty of firepower to invest in growing via expansion into new regions like Asia, building up its tech-led platforms, and making small bolt-on acquisitions.

With the demand for raw data and analytics tools growing rapidly, I think YouGov and its founder-led management team have set the business up well to continue double-digit expansion for a long time to come. While the company’s shares don’t come cheap at 33 times forward earnings, I still think the business is well worth considering if you’re after high growth holdings.

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Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. 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.

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