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Have £3,000? Here are 3 top growth stocks I’d buy for my ISA

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No one knows where the markets are heading in 2020. But we can be confident that great companies will continue to provide rich rewards for patient investors in the long term. Today, I’m turning my attention to three stocks of very different sizes that should do very well for growth-focused investors willing to stash them away in their Stocks and Shares ISAs.

Cheap thrills

Video gaming has been one of the most popular activities for many during the lockdown. This should be great news for UK-listed developers, such as Frontier Developments, Sumo and Team 17. My personal choice in this space, however, is Codemasters (LSE: CDM)

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An expert in the lucrative niche that’s driving games, the firm holds the coveted Formula 1 franchise. It’s also the brains behind the popular DiRT series.

Buying an individual developer arguably takes more guts than buying a ‘picks and shovels’ stock like services provider Keywords Studios. That said, the current valuation of Codemasters surely helps mitigate this risk. Changing hands for 15 times earnings, the stock is also considerably cheaper to acquire than its aforementioned peers.

Aside from the great outlook for the games industry in general, the company has net cash in its balance sheet and will launch the much-anticipated Fast and Furious Crossroads game in 2021.  

Growth play

As both a small-cap investor and customer, I think online musical instrument and equipment retailer Gear4music (LSE: G4M) is another great selection for those with long investing horizons.

Like the video games industry, Gear4music has been a beneficiary of the lockdown. CEO Andrew Wass recently said the company had seen high demand for its products since late March “as an increasing number of people recognise the benefits that playing musical instruments can bring during these difficult times.”

Regardless of the recent boost to business, the company was already growing nicely. Total sales for the year to the end of March came in at £120.3m. Almost half of this (£58.5m) was from outside the UK, giving a good amount of geographical diversification to earnings. In line with the company’s objective, gross margin also recovered over the last year.

Gear4music’s small-cap status means its share price is likely to remain volatile, but the long-term outlook looks very promising. The relentless rise in online retail, coupled with the struggles many independent bricks and mortar instrument sellers are likely to experience going forward, could play right into the minnow’s hands. 

Reassuringly expensive

My final growth pick for today is IT re-seller and services provider Softcat (LSE: SCT). Demand for cloud-based, datacenter and networking and security solutions from organisations will surely only increase post-pandemic.

The FTSE 250 member could be the ideal way of playing this trend. Softcat already generates exceptional returns on the money it invests in itself and, again, boasts very sound finances.

Of course, the fact that the business already trades at a punchy valuation (30 times earnings) could mean it’s hit harder than most if — and that’s a mighty ‘if‘ — markets eventually resume the downward trajectory witnessed in March.

So long as you’re in for years rather than weeks, I can only see the share price going in one direction in time. Perhaps this may be one to buy into regularly, rather than in one fell swoop.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Softcat. 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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