Stock investing can be challenging. Many investors struggle to earn profits in the stock market, and it certainly isn’t suitable for everyone. Investors should only ever invest money they can afford to lose.
However, over the past few years, I’ve increased my wealth by acquiring a diversified basket of growth shares. While past performance is no guarantee of future potential, I think I can continue to grow my wealth by following a similar strategy as we advance.
With that in mind, here are three of the best growth shares I’d buy for my portfolio right now.
Stock investing: market opportunities
Fevertree Drinks (LSE: FEVR) has been on my radar for a long time. The consumer goods company has cornered the market for premium tonics in the UK. This foothold has given the group solid foundations to drive expansion overseas.
Although this growth strategy struggled in 2020, analysts forecast a return to growth in 2021. Current projections suggest the business will report sales of nearly £300m in 2021, up from £247m in 2020. However, I should caution that these are just projections at this point.
Still, Fevertree is highly profitable. This gives the business plenty of cash to reinvest back into its growth efforts. Meanwhile, the group’s operating profit margin has averaged 29.8% for the past five years. Although this profitability doesn’t guarantee growth, I think it puts the company in a good position.
So, while the business does face risks, such as increased competition and higher costs, I’d buy Fevertree based on its growth potential and growing profitability.
Property and stock investing are very different activities, but I think Rightmove (LSE: RMV) offers the best of both. It owns the largest online property portal in the UK and I think it’s going to be difficult for competitors to grab market share. Indeed, many have tried and failed to topple Rightmove from its lofty podium.
Of course, its historical market dominance doesn’t guarantee future success. A well-funded competitor could decimate its business, especially if a large technology firm backed it. That’s something I’ll keep an eye out for. But, in the meantime, I’d buy the stock based on its current market position and potential.
The housing market is worth an estimated £1bn per 100,000 property transactions. It’s a considerable value generator for the UK economy, and Rightmove is one of the most important businesses in this sector. I reckon that bodes well for the group’s future potential.
Successful stock investing is all about forecasting future growth trends. I think only a handful of markets will grow no matter what happens to the global economy. One of those is education.
RM (LSE: RM) supplies education resources, such as examination technology and IT solutions to educational bodies in the UK and worldwide. I think the business model is incredibly attractive, although there are risks to RM’s growth.
The market is highly competitive and dependent on government funding, which can vanish overnight. These are two significant risks the company faces.
Still, if management can successfully execute a growth strategy over the next few years, I’d buy RM, considering its potential. With revenues of just £224m for 2019, the group is still relatively small compared to the UK education market’s overall size, which stands at £20bn.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Fevertree Drinks and Rightmove. 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.