Since the stock market crash in March, the majority of shares have seen their prices decline greatly. However, some UK shares have seen tremendous growth despite the pandemic – and have the potential for it to be sustained in the future.
Codemasters Group Holdings (LSE: CDM) is a UK-based video game developer. It is known for making racing and driving games, with its portfolio including the top selling titles DiRT, GRID and Formula 1. Codemasters’ share price has grown around 65% since January, making it one of the best performing UK growth shares this year. This is matched by the company’s performance, with strong cash generation and lack of debt, as reported in its recent half year results.
The company also has a pipeline of games to be released in the near future and I have no reason to believe that strong sales growth won’t continue.
Overall, the video games industry has seen an increased demand during the pandemic as customers turned to video games as one method of entertainment during lockdowns. The demand isn’t just restricted to the unique circumstances of this year, though, as the industry is projected to experience an average year-on-year growth of 9% until at least 2027.
One concern that I have with Codemasters’ share price is that currently it trades with a price to earnings (P/E) ratio of 56, which can be considered expensive. However, when compared with its competitors, such as Team 17, Frontier Developments and Keywords Studios, possessing P/E ratios of 52, 59 and 47 respectively, I think Codemasters’ shares are competitively priced.
Avon Rubber (LSE: AVON) is a UK-based technology company. Through its two businesses, Avon Protection and Milkrite/InterPuls, it specialises in personal protective equipment and agricultural milking equipment.
Since the start of the year, this UK growth share has seen its share price increase by over 90%, a prediction correctly made by fellow Fool Paul Summers back in May. This is predominantly attributed to strong demand for the products of its Avon Protection business by winning contracts such as the US Army helmet contract worth $93million, US Department of Defence face mask filter contract, worth a potential $127million, and a 10 year contract to supply NATO with the FM50 face mask system. This was reflected in its 2020 first half results, when Avon announced an unprecedented growth in operating profit of 20.6% compared to last year and an increase in the interim dividend of 30% to 9p per share.
Despite a premium P/E ratio of 43, I still think Avon Rubber is an attractive share; however, the true success of this year will be shown in Avon’s full-year results, set to be announced on 18th November. If recent months are any indication to go by, I expect this year to be a record year for this UK growth share.
Both Codemasters and Avon Rubber have shown a resilience to the pandemic as well as a strong capacity to sustain growth, making them two of the best UK growth shares that I could buy and hold in my portfolio.
Jordan Simmons has no position in any of the shares mentioned. The Motley Fool UK has recommended Avon Rubber, Frontier Developments, and Keywords Studios. 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.