Growth investing is a strategy primarily focused on capital appreciation. Through share price gains, investors can realise some pretty serious returns if they find the right stocks.
Investors going for growth are searching for companies that generate above-average revenue and earnings growth. In turn, this should lead to greater capital appreciation and, over time, an investment that has grown in value substantially.
In my view, there are plenty of opportunities on offer on the FTSE 100, FTSE 250 and FTSE AIM 100 for UK investors to buy growth stocks. Here’s a selection that I think could be among the best shares to buy now if you’re looking to build wealth over the long term.
FTSE 100 growth stocks
The blue-chip FTSE 100 index contains a handful of companies that I’d classify as growth stocks. For example, take internet supermarket Ocado and online property retailer Rightmove. Both are harnessing technology to their advantage and as a result, could feasibly continue to grow earnings in the future. As always though, I recommend both as long-term plays in order to mitigate the effects of any short-term volatility.
FTSE 250 growth stocks
The FTSE 250 index boasts even more opportunities for growth investors than its large-cap counterpart. Think companies such as HomeServe, Greggs, and Moneysupermarket.com. Each has successfully managed to grow revenues, earnings, and their consumer base over recent years. What’s more, thanks to their profitable business strategies and market dominance, I reckon all three have the capacity to continue growing in the long run.
Small-cap growth stocks
If your goal is to generate the strongest investment returns possible, it’s worth looking outside the FTSE 350. Allocating just a small amount of your portfolio to the best UK small-cap shares could yield some explosive returns further down the line.
To illustrate, if you had invested in a promising growth stock such as Games Workshop at the start of 2017, you’d currently be sitting on a return of approximately 1,027%! Remember though, finding those growth gems is no mean feat.
That said, I recommend taking a look at small-cap stocks like Boohoo and DotDigital Group. These companies have innovative business strategies that could rocket-propel growth in the future.
Best UK shares to make a million
Once you’ve scooped up some of the UK’s best growth shares and added them to your portfolio, sit back and let the wonders of time and interest to do the hard work for you. By allowing your investment returns time to compound, you unlock the potential to realise some serious gains.
Over the past 30 years, the FTSE 250 index has returned nearly 12% per annum. While there’s no guarantee that you’ll be able to replicate this, investing just £250 a month with an annual return of 12% will give you an investment pot worth £1,092,919 after 33 years. Even with a modest annualised return of 8%, you’d have a pot worth £539,101 after 35 years of investing £250 a month. As such, companies that exhibit promising growth potential could truly be among the best UK shares to buy now.
Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo group, dotDigital Group, Homeserve, Moneysupermarket.com, and Rightmove. 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.