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Top growth stocks for September

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We asked our freelance writers to share the top growth stocks they’d buy this month. Here’s what they chose:

Royston Wild: B&M European Value Retail

As the UK economy spits and splutters, I think B&M European Value Retail (LSE: BME) will continue rising in price. Its shares have already soared in 2020 as investors expect a prolonged period of weak consumer confidence. In this environment, sales of B&M’s vast range of discount foods and household staples will keep on shooting through the roof.

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Despite its rocketing stock price — an ascent that is set to see it promoted to the FTSE 100 later this month — B&M’s shares still look attractively priced at current levels. City analysts reckon that earnings will soar around 60% this year. And this leaves it trading on a forward price-to-earnings growth (PEG) multiple of 0.3. I reckon it’s a top buy right now, with a 2.2% dividend yield providing an extra sweetener.

Royston Wild does not own shares in B&M European Value Retail.

Rupert Hargreaves: Team17

Video game developer Team17 (LSE: TM17) looks set to report a record-breaking 2020. In its latest trading update, the company said it experienced “strong sales traction” during the six months to the end of June. It also noted demand for its back catalogue was exceptionally high in April and May.

At this stage, it is impossible to tell how this will impact full-year trading performance. However, analysts were already projecting earnings growth of 20% this year.

As such, I reckon Team17 is a high growth stock worth buying in September.

Rupert Hargreaves does not own shares in Team17.

Matthew Dumigan: ASOS 

Online fashion retailer ASOS (LSE: ASC) has enjoyed an outstanding run recently, something that can’t be said for many listed companies over the past few months. To illustrate, since the start of 2020, the shares are up almost 40%. 

A trading statement released in July detailed that for the four months ending 30 June, group sales climbed by 10%. Additionally, active customers increasing by 16% year-on-year, ‘with particularly strong growth in new international customers’

Overall, thanks to this solid performance, I’m confident the company’s upward trajectory can continue, especially given the strength and growth potential of the underlying business. 

Matthew Dumigan does not own shares in ASOS.

G A Chester: Avon Rubber 

Avon Rubber (LSE: AVON) announced the divestment of its dairy milking technology business earlier this year for £160m. This leaves it focused as a fast-growing global leader in respiratory and ballistic protection for the world’s militaries and first responders. 

The company’s scheduled to release a trading update soon, ahead of its financial year-end of 30 September. City analysts expect 6% earnings growth for the year, reaccelerating to 26% in fiscal 2021. The stock trades at around 30 times the forecast 2021 earnings. 

The company has moved quickly to put its divestment proceeds to work. It announced the £100m acquisition of a military helmet-maker just this week. 

G A Chester has no position in Avon Rubber.

Anna Sokolidou: Dotdigital

Dotdigital (LSE:DOTD) is a typical high-tech company. It provides quite cheap and highly targeted digital marketing services. It derives a lion’s share of its revenues from the UK market. Most of its customers are financial, e-commerce, travel and leisure companies.

Dotdigital has a market capitalisation of just under £400m but its share price is near all-time highs. Due to the growing popularity of internet marketing, its sales keep rising.

It is trading at a price-to-earnings (P/E) ratio of around 36. Compared to “trending” shares, it’s not too much. What’s more, unlike many other growth companies it pays dividends.

Anna Sokolidou has no position in Dotdigital.

Edward Sheldon: Gamma Communications

My top growth stock for September is Gamma Communications (LSE: GAMA). It’s a technology company that provides ‘unified communication services.’ Its solutions help businesses raise productivity, boost agility, and increase collaboration.  

Gamma is an extremely profitable company that has a great growth track record. Recently, it advised that it expects EBITDA and earning per share for the full year to be ahead of consensus expectations.

GAMA is not a particularly cheap stock. Its forward-looking P/E ratio at the time of writing is about 30. I think this growth stock deserves a premium, however. In my view, it has significant growth potential.  

Edward Sheldon owns shares in Gamma Communications.

Kirsteen Mackay: Computacenter 

Computacenter (LSE:CCC) reported better than expected annual results thanks to better than expected trading throughout the year. With more people committed to working from home and new orders from the government and financial sectors, its business thrived and offset losses from industrial customers. I think this is likely to continue as the pandemic shows no signs of slowing down.

The FTSE 250 group has a price-to-earnings ratio of 23 and earnings per share are 90p. It increased its interim dividend pay-out by 22%. It also agreed to buy Canadian company Pivot Technology Solutions, which should increase its opportunity for growth.  

Kirsteen does not own shares in Computacenter.

Paul Summers: Spirent Communications

Anyone looking for top growth stocks should take a closer look at IT infrastructure business Spirent Communications (LSE: SPT), in my opinion. Its expertise means this company is in a great position to capitalise on the rollout of 5G technology over the next few years. 

Trading at 25 times forecast earnings, Spirent isn’t cheap. However, improving operating margins and returns on capital employed, stacks of cash on the balance sheet, and geographical diversification suggests the stock is worth digging deep for. There’s even a small (and growing) dividend.

I think those prepared to buy and hold could see a very tidy return. 

Paul Summers has no position in Spirent Communications.

Kevin Godbold: Computacenter

FTSE 250 company Computacenter (LSE: CCC) has consistently grown for the past decade. And in the half-year report of 9 September, the IT infrastructure and services firm revealed good figures for the period to 30 June 2020. Adjusted diluted earnings per share jumped more than 35% higher year on year, and the directors pushed up the interim dividend by almost 22%.

The business was resilient” through the Covid-19 crisis, with customers investing in their IT infrastructure. A recent acquisition announcement aimed at expanding operations further in the US and Canada demonstrates growth remains on track. I’d buy for September and beyond.

Kevin Godbold owns shares in Computacenter.

Jonathan Smith: Barratt Developments

The UK housebuilder Barratt Developments (LSE:BDEV) saw a share price rally of almost 60% in 2019. However, the lockdown restrictions hit the property sector hard in the first half of this year. Barratt reported annual completions down 29% in a mid-year trading update.

I think this top growth stock could rebound strongly in the short term. Forward sales are up 22% on the year. The average selling price is also higher, at £280,000. Add into this the stamp duty holiday along with reports of house prices continuing to rise, and demand for new homes should be very strong. 

Jonathan Smith does not hold any position in Barratt Developments.

Roland Head: Auto Trader 

Early reports suggest the car market is bouncing back strongly from lockdown. According to Auto Trader (LSE: AUTO), traffic to its website was 28% higher during the first three weeks of June than at the same point last year.

The pandemic has also increased the level of car-buying activity that takes place online. As Auto Trader continues to expand into the new car market and offer other new services, I think it will continue to grow.

Auto Trader shares always look pricey, but with profit margins running at close to 70%, I’d be happy to buy at current levels.

Roland Head does not own shares in Auto Trader Group.

Manika Premsingh: London Stock Exchange Group

At a challenging time for the stock markets, the FTSE 100 share London Stock Exchange Group (LSE: LSE) stands out. Its share price has not just risen sharply, it has consistently created multiple new all-time highs in the months since the stock market crash. As a result, it’s now one of the priciest FTSE 100 stocks, with an earnings ratio of around 80 times.

But I reckon its share price will continue to rise because of its robust financial performance. A 16% increase in interim dividend is another positive for the stock, since this is in sharp contrast with dividend suspension or reduction by other FTSE 100 companies.

Manika Premsingh has no position in the London Stock Exchange Group.

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The Motley Fool UK has recommended ASOS, Auto Trader, Avon Rubber, B&M European Value, and dotDigital Group. 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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