Right now, stock market investors are enjoying an incredible bull market. Year to date, the FTSE 100 index is up around 9%. Meanwhile, this year, the S&P 500 is up around 11%.
There’s always a chance we could see a pullback in the near term, of course. No one knows for sure what stocks will do next week or next month. However, encouragingly, some financial experts believe stocks could keep rising for a while.
Below, I’m going to highlight three growth stocks that I believe have the potential to rise in this bull market (and over the long term). I’d be happy to buy all three for my own portfolio today.
One stock that has a lot of momentum at the moment is Clipper Logistics (LSE: CLG). It’s a fast-growing logistics company that offers a range of crucial services to retailers.
Clipper has gone from strength to strength recently. In February, for example, it announced that it had won logistics contracts with River Island and Mountain Warehouse. Meanwhile, earlier this week, it announced that it had signed a letter of intent with JD Sports Fashion to provide e-fulfilment services. Looking ahead, I expect the company to keep growing as the e-commerce industry expands. For the year ending 30 April 2021, analysts expect revenue growth of 28%.
It’s worth pointing out that CLG shares have had a great run over the last year (+230%). So, there’s always the risk of a pullback. However, the stock’s valuation (P/E of 23) doesn’t appear stretched right now. This leads me to believe it can keep climbing.
Another growth stock I like the look of right now is Alpha FX (LSE: AFX). It’s an under-the-radar financial services company that helps businesses manage their foreign exchange (FX) risk. Its clients include ASOS and Halfords.
Alpha FX posted its full-year 2020 results in March and the numbers were impressive. For the year, revenue was up 31% to £46m while underlying profit before tax was up 20% to £17.5m. Looking ahead, the company said that it remains optimistic that it’s on track to deliver another strong year of growth this year.
Alpha FX isn’t a cheap stock. Currently, it sports a forward-looking P/E ratio of about 34. So, there’s some valuation risk here. If growth stalls, the stock could fall. However, I’m comfortable with this valuation as Alpha is a high-quality company with a good track record.
The third stock I want to highlight is XP Power (LSE: XPP). It’s a leading manufacturer of critical power control components for the electronics industry with a focus on the industrial, healthcare, and technology sectors.
XP Power posted an encouraging Q1 2020 trading update earlier in the week. In this update, the company advised that the group had made a good start to the year with order intake up 7% year-on-year. For the quarter, revenue was up 23% at constant currency.
It said it believes it’s well positioned to grow ahead of its end markets. However, it noted that ongoing Covid-19 uncertainty and FX movements could impact the growth story. These are definitely risks to keep an eye on.
XP Power shares have experienced a bit of a pullback recently. As a result, the stock currently trades on a P/E ratio of 25. I think that’s a reasonable valuation for this stock. At that valuation, I see it as a ‘buy’.
Edward Sheldon owns shares in Clipper Logistics, JD Sports Fashion, ASOS, and Alpha FX.The Motley Fool UK has recommended Alpha FX, ASOS, Clipper Logistics, and XP Power. 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.