The London Stock Exchange is home to some really exciting growth stocks. Plenty of UK companies are growing at a prolific pace and delivering amazing gains for investors in the process.
Here, I’m going to highlight three ‘monster’ growth stocks I’d buy for 2021 and beyond. In my view, these stocks have the potential to generate big gains for investors in the long run.
Huge social media presence
One growth stock I believe has a lot of potential in 2021 and beyond is online fashion retailer Boohoo (LSE: BOO). It’s the owner of a number of hot brands including Boohoo, PrettyLittleThing, and Nasty Gal.
There are a few reasons I’m bullish on Boohoo. Firstly, it’s benefitting from the shift to online shopping. Secondly, going forward, working from home is going to remain a theme. This is going to keep demand for ‘loungewear’ elevated. Third, its brands are immensely popular with millennials, thanks to its huge social media presence.
Boohoo’s top line is expected to grow 34% this year and 25% next year. This means it’s growing at an incredible pace. Yet, right now, the stock is trading on a forward-looking P/E ratio of under 30 due to the supply chain issues the company’s facing (and has has vowed to fix). I see that valuation as a steal. I think Boohoo shares have considerable upside from here.
A disruptive growth stock
Another UK growth stock I think has massive potential is Keystone Law (LSE: KEYS). It’s an innovative ‘platform-based’ law firm that’s disrupting the legal industry by enabling lawyers to work from home or their own offices.
The firm – which was recently named ‘Law Firm of the Year’ – currently has over 350 lawyers on its platform yet believes its addressable market is nearly 50,000 lawyers. Founder and CEO James Knight owns around 34% of the shares, meaning management’s interests are aligned with those of shareholders.
Keystone’s growth has been underwhelming this year due to Covid-19. This is due to the fact that demand for some legal services (such as those associated with transactions) has been weak. However, looking forward, growth is expected to pick up as economic activity rebounds. Next year, analysts expect revenue and net profit to rise 15% and 19% respectively.
Keystone shares are currently trading about 25% below their 2020 highs on a forward P/E of about 30. I think that valuation is very reasonable given the ‘scaleable’ nature of the business. I’m quite excited by the disruptive potential here.
three-year revenue growth of 300%
Finally, I also like Alpha FX (LSE: AFX). It’s a fast-growing (three-year revenue growth of 300%+) financial services company that helps businesses manage currency risk. Like Keystone Law, it’s a founder-led company.
Alpha FX issued a very encouraging trading update recently. In this update, the group advised it recorded a “strong performance” in October and November, with H2 2020 revenue across all business divisions growing versus the comparable period in H2 2019. As a result of this performance, it said it expects full-year earnings to be ahead of expectations.
I last covered this monster growth stock in early November. At the time, I said it was a ‘buy’. Since then, it’s jumped 16%. I think it has plenty more growth to come however. At its current forward-looking P/E of around 32, I see further upside in 2021 and beyond.
Edward Sheldon owns shares in Boohoo, Keystone Law, and Alpha FX. The Motley Fool UK has recommended Alpha FX and boohoo 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.