The two UK shares I’m going to cover today are primed for growth. And I feel they could deliver much better returns than gold or Bitcoin.
FTSE 100 giants might pay a tidy dividend as and when those shareholder payments return in 2021 or 2022. But they are unlikely to deliver fast share price growth.
Well-known UK shares with armies of stolid asset managers propping up their price will have reached their growth peak long ago. As one professional day trader said to me: “No-one ever went bust buying Tesco.”
No, but unless you’ve got several hundred thousand quid lying around, buying Tesco shares won’t make you rich either. Dividends are important, of course, but investing for dividends in quality FTSE 100 UK shares is a fundamentally different style than investing for growth.
UK shares focus
If you want the kind of growth that can make you rich, I think you should focus on the cream of the crop of UK shares on the FTSE 250 and AIM markets.
They should be growing fast, with strong, Warren Buffett-inspired economic moats to protect their market share.
They should also be highly profitable, with low or no debt, have a good pathway to more growth with a brilliant management team at the helm. That’s not too picky a shopping list, right?
Gaming UK shares
First up is my perennial favourite Games Workshop (LSE:GAW). Just when I think shares in the FTSE 250 modelmaker can’t improve, they break new all-time highs.
A P/E near 40 may turn off the bargain hunters, yet buying shares that appear expensive can pay off. That is, if the company is growing strongly. I’ve held Games Workshop for 12 months and the shares have doubled in value. That’s turned my portfolio from middling to red hot! And those high expectations of future growth are supported by two things: zero debt on the balance sheet and £50m of net cash.
I think these UK shares have a solid chance to make you rich. The company said in April its full-year profits would dip because of lockdown, but added in June that recovery had been “better than expected“.
Full-year profits and sales, of £85m and £270m, will be another improvement on the year before.
I reckon business telecoms and cloud architecture provider Gamma Communications (LSE:GAMA) has more room to shoot higher too. These UK shares are up 435% in the last five years, while the price has lifted 42% since I bought-in three months ago. But honestly, I think there’s much more upside to come.
It has the kind of share price chart that just keeps climbing and hitting new heights as more investors realise it exists.
Three main facts attract me. One, management is doing a stellar job. Two, it has no debt and £37.7m net cash. Three, the business is making money hand over fist and keeps attracting new investors.
A €20.4m purchase of German B2B mobile provider HFO gives Gamma a new and significant market presence in northern Europe. The takeover will be “earnings enhancing immediately“, to further improve Gamma’s bottom line.
Cloud markets in Holland and Germany are far behind the UK, but are growing rapidly, so there’s really stonking growth potential here.
These are my picks for the very best UK shares on the market right now. I’d wager they’ll prove themselves big winners for anyone willing to take a look.
Tom Rodgers owns shares in Gamma Communications and Games Workshop. The Motley Fool UK has recommended Tesco. 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.