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2 UK growth stocks I’d buy in February

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Owning a number of UK growth stocks has made a massive difference to my wealth in recent years. Not every growth share I’ve invested in has done well. However, quite a few, including ASOS, Keywords Studios, and Alpha FX, have delivered triple-digit returns for me.

Here, I’m going to discuss two UK growth stocks I’d happily buy for my own portfolio as we begin February. I think both of these stocks have considerable long-term potential.

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An online shopping growth stock

One growth stock I like the look of right now is Clipper Logistics (LSE: CLG). It’s an under-the-radar UK company that offers a range of services to retailers, including warehousing, delivery, and returns management. It has an amazing list of customers that includes John Lewis, Marks & Spencer, and Farfetch.

I actually bought CLG for my own portfolio about three years ago, believing it was a good play on the growth of e-commerce. For the next two years however, its share price fell.

Being a long-term investor though, I held on. This paid off. Last year, the stock rose about 100% as e-commerce trends were accelerated due to lockdowns. As a result of this strong performance, I’m now sitting on a profit.

Looking ahead, I think CLG shares have the potential to keep rising in the long run. Recent trading updates have been very strong. City analysts also expect revenues and profits to increase substantially this year and next on the back of further growth in e-commerce.

But there are risks to the investment case here. One thing that’s worth noting is that chairman Steve Parkin just sold about £60m worth of stock. This could be interpreted as a sign he sees the current valuation (the forward-looking P/E ratio is about 20) as too high. The company also has quite a bit of debt on its balance sheet. This could make the company more vulnerable in a downturn.

Overall however, I think the long-term risk/reward proposition offered by CLG shares is attractive. I’d be happy to buy more stock for my portfolio at current levels.

Transformational deal

Another UK growth stock I’m excited about as we begin February is online retailer Boohoo (LSE: BOO). It owns a number of very popular brands including PrettyLittleThing and Nasty Gal. Recently, it announced that it had bought the Debenhams brand in another strategic acquisition.

I see the Debenhams acquisition – which has been described as a ‘transformational deal’ – as a very smart move from Boohoo. Debenhams is a well-known brand and its website is a top 10 retail website in the UK by traffic. If Boohoo can successfully rebuild and relaunch the Debenhams platform, it could potentially capture significant market share in areas such as beauty and homewares. It could also capture a whole new demographic.

Of course, at this stage, there’s no guarantee the Debenhams acquisition will be a success. These kinds of major deals don’t always work out. However, given Boohoo’s track record with acquisitions, I’m cautiously optimistic it’ll be successful.

Boohoo shares currently trade on a forward-looking P/E ratio of about 32. That’s a relatively high valuation which means if the company’s future performance disappoints, the shares could fall. However, given Boohoo’s rate of growth, I’m comfortable with it. I’d be happy to buy this growth stock for my portfolio today.

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Edward Sheldon owns shares in ASOS, Alpha FX, Keywords Studios, Boohoo, and Clipper Logistics. The Motley Fool UK has recommended Alpha FX, ASOS, boohoo group, Clipper Logistics, 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.