Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.

Why we like it: “Focusrite (LSE: TUNE) is dedicated to using high-end technology in its goal to ‘make music easy to make’, building on former Led Zeppelin sound engineer, and the company’s executive chairman, Phil Dudderidge’s vision for the business. Focusrite produces state-of-the-art audio hardware and software for both influential artists and devoted hobbyists. It has an enviable track record of revenue growth, margin expansion and high returns on investment.

“It has spent decades building up its product line to reach everyone, from professional musicians to would-be Led Zeppelins in their parents’ garages and everyone in between. We believe this focus on providing high-end equipment at a variety of price points for customers all over the globe is a solid base upon which the firm can continue to grow organically and via selective acquisitions.”

Why we like it now: After losing over half its market value in the last 12-months, Focusrite is currently trading at a P/E ratio of 13.5. Net debt increased to £14m at the end of its first half, reflecting a rise in inventory. However, debt remains manageable with a bank credit line totalling £40m in place. Management anticipates gross margin improvements in the second half, driven by new product launches and a strengthened supply chain resulting from last year’s acquisition of Linea Research. By capitalising on the reduced share price, investors could have the potential to enjoy significant gains as the company’s performance recovers. This recovery is expected due to the growing demand for high-quality audio equipment across various sectors, including music production, podcasting, and live streaming.

The post Just released: our 3 top small-cap stocks to buy now [PREMIUM PICKS] appeared first on The Motley Fool UK.

Some of the market’s favourites have attractive long-term futures. But judging by recent price rises and current valuations, they haven’t exactly flown under the radar.

Games Workshop has been growing its earnings and raising its dividend year after year. The share price has been erratic, though.

If we invest in growth shares, we have to expect ups and downs. It’s clearly better to buy on a down.

But Games Workshop shares have climbed 35% over the past 12 months. And we’re looking at a price-to-earnings (P/E) in the low 20s now.

I like the look of Greggs too. But again, nobody’s really failed to notice it. I reckon Greggs shares were a top bargain back in October, but they’re up 60% since then. And the forecast P/E is also above 20.

Under the radar

The one I have in mind today is Focusrite (LSE: TUNE). It makes a range of audio production products and software. It’s particularly well known for its USB interfaces, which gather a fair bit of praise.

The AIM-listed stock soared in 2021, as often happens in the early stages of a promising growth stock’s life. But since then, they’ve fallen way back. From its heights, the price is now down a whopping 60%.

New bull run?

Are the shares good value now? And is this just a pause before a second bull run? Earnings forecasts, coupled with the current valuation, make me optimistic.

Analysts put the stock on P/E multiples of a relatively undemanding 18 or so.

Unlike Games Workshop and Greggs, the radar doesn’t seem to have swept back in the direction of Focusrite just yet.

But are the bullish forecasts justified?

Positive trading

February’s trading update made things sound good. There have been supply problems, but they’re improving. Component shortages are easing, and gross margins are strengthening.

The board says everything’s going as expected, and there should be a second-half weighting due to product release timescales.

Maybe investors are waiting to get past the relatively slower first half before they consider buying back in again?

Time to be cautious?

My main reason for caution is that Focusrite operates in a bit of a niche market, and it’s a fairly competitive one. I’m also wary of trying to time the ups and downs of growth share prices.

My main criterion for an investment decision is not whether the rest of the market has noticed it yet.

No, it’s all down to valuation. And on that measure, I’d rate Focusrite as a potential buy for those with a long-term horizon.

Diversified growth

I’d also balance the risk by buying the shares as part of a diversified portfolio, spread across different sectors.

And on that thought, I can’t help thinking Focusrite, Greggs and Games Workshop might make a good foundation for a profitable growth share portfolio.

The post 1 under-the-radar growth stock to buy in March appeared first on The Motley Fool UK.

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Ashtead Group 

What it does: Ashtead Group supplies rental equipment chiefly to the US construction and industrial sectors. 

By Royston Wild. FTSE 100 stock Ashtead Group (LSE:AHT) has delivered strong and sustained earnings growth for more than a decade now. This has been underpinned by a commitment to acquisitions that’s blasted the rental equipment specialist’s market share higher. 

City analysts are expecting annual profits to keep expanding over the next few years at least. A 22% increase is tipped for the current financial year to April 2023 alone. 

I think buying Ashtead shares could be a good idea before third-quarter trading numbers are released on Tuesday, 7 March. The company has a strong track record of beating expectations, and in December’s second-quarter update predicted that full-year earnings would beat its forecasts. 

Another solid result next month could lift the Footsie firm’s share price even higher. I expect trading here to remain strong as equipment demand from its key end markets continues to outstrip supply. 

Royston Wild owns shares in Ashtead Group. 

Diploma

What it does: Diploma is a collection of smaller businesses focused on distributing industrial components.

By Stephen Wright. Top of my list of growth shares to buy is Diploma (LSE:DPLM). The stock is down 2% since the start of the year, compared to a 3% increase for the FTSE 250, so I’m looking to take advantage of the falling share price.

Diploma has everything that I look for in a stock. It has an economic moat, it generates solid cash flows, and it’s growing. 

The company’s moat comes from the fact that its subsidiaries have dominant positions in niche markets. This makes them difficult to disrupt. 

As a distributor, the company doesn’t have manufacturing plants to maintain. That allows it to keep its capital expenditures to 12% of the cash it generates through its operations.

Lastly, the company reported 30% revenue growth at its last earnings presentation. It ticks all the boxes for me, which is why it’s my top UK growth stock to buy in March.

Stephen Wright owns shares in Diploma.

Focusrite

What it does: Focusrite is an audio technology company, which develops and markets hardware and software solutions

By Paul Summers: I’ve long been an admirer of global music and audio products group Focurite (LSE: TUNE). However, it’s always been just that little too dear for me to buy. That is, until now. 

Last year wasn’t an easy one for investors. High freight costs impacted margins. Component shortages and supply chain issues added to the mid-cap’s woes.  

February’s update was more encouraging. Trading during the first four months of its financial year has been in line with management expectations and guidance remains unchanged. The aforementioned issues are also showing signs of fading.

Having tumbled over a third in value in the last 12 months, the stock now trades at less than 16 times earnings. That’s not cheap relative to the general market, but it could prove a bargain in time thanks to new product launches and acquisitions.

Consistently high returns on the money it puts to work are another attraction.

Paul Summers has no position in Focusrite

Games Workshop

What it does: Games Workshop is a British manufacturer of miniature fantasy wargames including its iconic and proprietary Warhammer series.

By John Fieldsend. Games Workshop (LSE:GAW) has had an excellent few years in terms of growth. Since 2016, the company has enjoyed year-on-year average revenue growth of over 20%, with the revenue growing from £118m in 2016 to £415m in 2022. And with average profit margins in the 60-70% range, earnings look very good too. 

The recent move by Amazon Prime Video to make a TV series using the Warhammer name is an intriguing one. Similar fantasy worlds like Game of Thrones and Lord of the Rings have proven to be runaway successes. If Amazon can replicate even a fraction of those successes, it could be a strong catalyst for Games Workshop’s share-price growth. 

As far as growth stocks go, I can’t see anything else around right now that offers the same solid financials along with a potential catalyst in the near future.

John Fieldsend does not own shares in Games Workshop or Amazon. 

Greggs

What it does: Greggs is a popular and affordable UK-based food-on-the-go retailer. It manufactures and sells a variety of freshly prepared food.

By Harshil Patel. Greggs (LSE:GRG) is currently my favourite growth share in the UK. It has been on quite a journey over the years, transforming from a predominantly Northern bakery to a nationwide, modern food-on-the-go brand.

But its journey looks far from over. It has an ambitious plan to double its sales over the next five years. That level of growth is likely to come from new store openings.

Last year, it managed to open a net 147 stores and it has a similar target for 2023.

Additionally, it plans to grow sales from extending evening trade and expanding its digital offering.

It’s not the cheapest stock around, but its growth rate could justify its elevated price-to-earnings ratio.

With a return on capital employed of over 20%, and a double-digit profit margin, I’d call this a high-quality growth business.

It offers ample cashflow, and a solid balance sheet. This should allow it to comfortably use capital to expand the business.

Harshil Patel does not own shares in Greggs.

Kainos Group

What it does: Kainos provides information technology, consulting, and software for business clients and organisations.

By Charlie Carman. Kainos Group (LSE:KNOS) is well positioned to take advantage of the ongoing AI revolution. The company’s expertise in digital transformation places it at the forefront of UK stocks operating in this exciting sector. 

The business recently partnered with HM Land Registry to develop an AI solution that reduces the need for manual labour in its oversight of 25m property titles. Its successful delivery of bespoke image-based recognition modules and document comparison tools gives Kainos significant credibility in the sector. 

Beyond AI, the company’s partnership with US software vendor Workday is an important source of income. Kainos has delivered rapid compound annual growth rates in revenue for Workday services and products of 50% and 42% respectively over the past five years. 

A price-to-earnings ratio above 46 might look lofty, and this comes with heightened volatility risks. Nonetheless, if the company can continue delivering exceptional growth, the shares’ valuation doesn’t look unreasonable to me.

Charlie Carman has no positions in Kainos Group.

Sage

What it does: Sage is a provider of cloud-based accounting and payroll solutions with a focus on small- and medium-sized businesses.

By Edward Sheldon, CFA. There are two main reasons I’ve selected Sage (LSE: SGE) for my top growth shares this month.

The first is that the company is performing well at the moment. In a trading update posted in January, it advised that for the quarter ended 31 December 2022, it generated total revenue growth of 9% year on year. Recurring revenue from Sage Business Cloud was up 31% year on year.

The second is that there has been some notable insider buying here recently. In January, Sage’s Chief Product Officer bought stock. Meanwhile, in February, a person closely associated with CEO Steve Hare purchased shares. Insiders only buy stock for one reason – they expect it to rise.

The biggest risk with Sage shares, in my view, is a sharp economic downturn that impacts smaller businesses badly. This could lead to lower growth.

I think there’s a good chance that demand for Sage’s solutions will remain robust, however. That’s because they can help companies increase efficiency and lower costs.  

Edward Sheldon owns shares in Sage.

The post Best British growth shares to buy for March appeared first on The Motley Fool UK.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

JD Sports

What it does: JD Sports sells sportswear and leisurewear globally across its own store estate and online.

By Christopher Ruane. Coming into 2023, JD Sports (LSE: JD) may not look as attractive as it did a year ago. Longstanding management that had helped propel the company’s success has been replaced. There is a risk that a challenging year economically may lead shoppers to spend less, hurting sales and profits.

Set against that, though, is the proven success of JD’s simple retail formula. Its huge reach gives it buying power. It has built a strong following and loyal customer base with well-honed advertising campaigns that help to create demand.

The falling JD Sports share price over the past year suggests investors may be falling out of love with the growth story. But new management could actually help invigorate sales. I see continued opportunities for the company to expand internationally as well as long-term potential in the company’s gym business.

I reckon the underlying long-term growth drivers remain strong as 2023 begins.

Christopher Ruane owns shares in JD Sports.

AJ Bell

What it does: AJ Bell provides investment administration, dealing and custody services.

By Paul Summers. I reckon shares in investment platform AJ Bell (LSE: AJB) represents a great growth buy at the current time.

Despite the cost-of-living crisis and the downward trajectory of markets, recent trading has been surprisingly good. Revenue increased 12% to £163.8m and pre-tax profit rose 6% to £58.4m in FY22. Things could get even better when the economic clouds disperse.

There’s just one snag. As an investor, I can have quality or a bargain price but arguably not both. AJ Bell is a good example of this. Based on analyst projections, the stock can now be mine for a still-rather-steep P/E of 26. 

Even so, this valuation is lower than the five-year average. I also think it can be justified based on the high margins and returns on invested capital that AJ Bell consistently delivers.

Paul Summers has no position in AJ Bell.

Scottish Mortgage Investment Trust

What it does: SMT invests in international growth, mostly high-tech Nasdaq stocks.

By Alan Oscroft. I rarely invest in growth shares, because of the volatility. And some of the sky-high P/E valuations make me twitch.

But Scottish Mortgage Investment Trust (LSE: SMT) helps with both those concerns.

It invests in an array of worldwide growth companies, focusing on the US Nasdaq tech stock index. It gets me good diversification from a single investment.

That helps when an individual stock or sector is falling. The trust holds Tesla, for example, and I think that was overvalued. But that risk is cushioned by holdings in unrelated sectors, like pharmaceuticals researcher Moderna.

Valuation is the other thing. I’ve thought Nasdaq stocks were overvalued for some time. I know people who know nothing about company valuation who were buying Tesla shares right up to the peak.

There’s risk of further falls. But with the Nasdaq down more than 25% in 12 months, I think January is a good time to buy.

Alan Oscroft owns shares in Scottish Mortgage Investment Trust

Focusrite

What it does: Focusrite is a designer and manufacturer of audio production equipment and software for professionals and hobbyists.

By Zaven Boyrazian. The audio equipment industry is quite a niche avenue. Yet it’s one that Focusrite (LSE:TUNE) has seemingly started to dominate. The music hardware and software creator continues to expand its powerful brands targeting professionals and hobbyists alike.

Profitability in 2022 suffered on the back of inflationary costs as well as some supply chain disruptions. However, the latter has since been resolved. And recent successful price hikes are starting to offset margin pressure.

Meanwhile, two of its bolt-on acquisitions have started exceeding expectations. Its Sequential brand saw a 206% revenue surge, while Martin Audio is up by 56%, both surpassing pre-pandemic levels.

In total, management launched 22 new productions throughout the year while keeping its balance sheet robust. The slowdown in consumer spending poses a short-term threat to the business’s hobbyist side. But in the long run, Focusrite seems on track to deliver some impressive gains for patient investors in this growth share.

Zaven Boyrazian does not own shares in Focusrite.

Greggs 

What it does: Greggs manufactures and then sells morning goods and other baked products from 2,000 locations across the UK. 

By Royston Wild. Buying retail shares can be risky during this cost-of-living crisis. Even sales of food and other essential items are under the cosh right now. 

But trading has so far remained resilient at bakery chain Greggs (LSE: GRG). And I’d buy it for my portfolio before fourth-quarter trading numbers are released on Thursday, 5 January. 

The FTSE 250 firm’s most recent financials in October showed like-for-like sales at its company-managed shops up an impressive 9.7% in the 13 weeks to 1 October. 

Greggs sells tea, cakes, sausage rolls and other staples of the British diet. And it offloads them at low price points. When combined, these qualities leave the company more resistant to tough economic conditions than most other UK-focussed retail stocks. 

This explains why City analysts expect Greggs’ earnings to keep growing. Current forecasts suggest bottom-line increases of 4% and 12% in 2023 and 2024 respectively. Earnings are tipped to edge 2% higher this year. 

Royston Wild does not own shares in Greggs.

easyJet

What it does: easyJet is a British multinational low-cost airline group. It operates domestic and international services on almost a thousand routes across Europe.

By John Choong. easyJet (LSE: EZJ) shares are trading below their pandemic lows while passenger numbers are higher than that period. For that reason, its shares are trading on an absolute bargain, in my opinion, and here’s why.

The group’s operational performance continues to improve and its Holidays segment is also growing at a rapid pace. Meanwhile, forward bookings are proving strong going into the summer. As such, management is expecting better yields for the year ahead. This should all help its top line. At the same time, its bottom line is expected to improve as the price of oil continues to fall. With more refineries coming online, jet fuel should follow in tandem.

As a result, Peel Hunt rates the stock a ‘buy’ with a price target of £5.50, presenting it with a 45% potential upside. Therefore, I’ll be adding these growth shares to my portfolio when I’ve got more spare cash.

John Choong has no position in easyJet or Peel Hunt.

4imprint Group

What it does: 4imprint Group is a direct marketer of promotional merchandise operating in North America and the UK.

By Ben McPoland. 4imprint Group (LSE: FOUR) is a company on a roll. The FTSE 250-listed firm recently announced it expects profit for the current financial year to be at the top end of both analysts’ and its own forecasts. That is pre-tax profit of at least $90m from group revenue of $1.1bn.

Despite being a leading promotional product distributor in the US, its market share there is still in the low-to-mid single digits. This leaves a very large and addressable target market (around $20bn). And that’s just in the US, never mind the opportunity to enter further international markets.

4imprint is a high-quality business in a growing but fragmented market. It has a strong balance sheet and long-term management. In fact, the CEO has been at the company for 30 years.

One risk is that the stock is near its all-time high, which could create valuation risk if the market drops in the near future. 

Ben McPoland does not own shares of 4imprint Group.

Future 

What it does: Future is a specialty media company that owns print and digital magazines, and websites. 

By James J. McCombie: Future (LSE: FUTR) has grown its annual revenues by 58% on average over the last five years. This success has been earned by acquiring titles and brands and using the company’s platform and expertise to maximise advertising, e-commerce affiliate, and sales and subscription revenue from the content it publishes. 

It is a remarkably efficient company, with operating margins at 23% for 2021, and generates plenty of free cash flow. That helps explains why net debt is 2.6 times operating income, which — for an acquisition-heavy business — is modest. 

Future trades at a P/E ratio of 8, because its share price has been sliding for a while. Results have been good, but investors are rightly worried that the CEO that turned the company around plans to step down by the end of 2023. However, the model for success is ingrained in the business and a new CEO should be able to copy it.  

James J. McCombie does not own shares in Future 

Ashtead

What it does: Ashtead is an international equipment rental company that operates in the US, the UK, and Canada.

By Edward Sheldon, CFA. There are two main reasons I’ve selected Ashtead (LSE: AHT) as my top growth shares for January. The first is that the company has a lot of momentum right now. This is illustrated by the fact that last month, the company raised its guidance for the year ending 30 April 2023 and increased its interim dividend by a huge 20%.

The second is that the company is well positioned to benefit from supply chain onshoring in the US (the building of semiconductor manufacturing plants, etc.). Currently, it generates over 80% of its revenues from the US.

The biggest risk here, in my view, is a sharp economic downturn in the US. If the country was to fall into a deep recession, and construction came to a halt, Ashtead could suffer. Debt, which has risen in recent years, is another risk to consider.

I’m comfortable with these risks, however. Overall, I like the risk/reward skew.

Edward Sheldon owns shares in Ashtead

YouGov 

What it does: YouGov is an international online research data and analytics technology group. 

By G A Chester. The YouGov (LSE: YOU) share price reached an all-time high of 1,600p just over a year ago. It’s suffered since, in an indiscriminate sell-off of high-growth tech stocks. 

However, business performance has continued to impress. Results for the year ended 31 July showed underlying revenue growth of 20% and growth in underlying operating profit of 33%. The operating margin was 16.4% and has expanded every year for the last five years. 

I fully expect ongoing margin expansion to continue turbo-charging profit growth at a higher rate than revenue growth. And with the shares now at a steep discount, I see an opportunity to buy into a high-quality growth company at a reasonable price. 

A near-term risk is that the current challenging external environment could yet negatively impact the business. However, management said in October it’s “cautiously optimistic” and I’m hopeful this will be confirmed in a half-year trading update later this month. 

G A Chester does not own shares in YouGov. 

The post Best British growth shares to buy for January appeared first on The Motley Fool UK.

With this in mind, here are a couple of FTSE shares I’d start buying on Monday.

A losing bet… for now

First up is gambling firm 888 (LSE: 888). Having done extremely well during the multiple pandemic-related lockdowns, 888 shares hit the heights of just over 450p almost one year ago. Since then, trading has (inevitably) moderated.

Actually, that’s putting it mildly. A quick glance at the firm’s figures for the first six months of 2022 shows how much the cost-of-living crisis has impacted performance. Total revenue fell 13% to £332.1m. Profit tumbled 66% to £14.4m. Ouch!

Perhaps it’s no wonder the shares have halved in value this year.

Cheap growth share

Despite this, I can’t help but think this might be a contrarian itch worth scratching.

Following the recent acquisition of William Hill’s international assets from US firm Caesars Entertainment, 888 now has a huge opportunity to grow its market share. Moreover, the stock also has a PEG (price/earnings to growth) of just 0.2. That suggests I’d be buying at a seriously low price for the potential on offer.

Obviously, gambling firms are no strangers to headwinds. The ongoing risk of regulation is very much a ‘known unknown’. Competition isn’t exactly thin on the ground either.

Nor do I expect a recovery to be swift. In fact, management believes revenue in the second half of 2022 is likely to be similar to that seen in the first.

So long as I can remain patient, however, I’d feel comfortable buying today.

Post-pandemic loser

A second growth share I’d buy now is AIM-listed music and audio product company Focusrite (LSE: TUNE). Like 888, the business did exceptionally well during the pandemic as musicians and creators took to making content from home.

But purple patches only last so long. As lockdowns eased and normality returned, Focusrite saw demand taper off. Some of this was evident in the firm’s half-year results covering the period to the end of February.

Group revenue of £92.9m was lower than that achieved over the same period a year earlier. And based on the share price action since, it looks like investors are concerned about how the cost-of-living crisis is impacting the company. Focusrite stock is down over 40% in a year and 35% in 2022 alone.

Again, I reckon this may be an excellent opportunity to bag a slice of a high-quality company that consistently generates great returns on the money it invests in the business.

Worse to come?

This is not to say this growth share doesn’t have further to fall. A lot will depend on what Focusrite has to say in its next trading statement, due mid-September, particularly in relation to component supply issues and spiraling freight costs.

On a more optimistic note, a price-to-earnings (P/E) ratio of 18 already looks enticing to me. This is especially if, as the company has suggested, the release of seven new products in H1 looks likely to provide a boost to the full-year numbers.

I think the investment case here remains solid.

The post 2 growth shares I’d buy now without any hesitation appeared first on The Motley Fool UK.

Here are three companies that all feature on my shopping list to begin snapping up today.

Focusrite

The share price of global music and audio equipment firm Focusrite (LSE: TUNE) has had a pretty shocking year, so far. Priced at 950p, as I type, the stock is down 32% in value since the beginning of January.

At least some of this tumble makes sense. The AIM-listed company was one of the few beneficiaries of the multiple UK lockdowns. Now that we’ve regained our freedom, demand isn’t quite so robust. Recent half-year results revealed a 2.5% fall in group revenue to £92.9m.

Sure, galloping inflation and component supply issues haven’t exactly helped. The risk here is that these continue to impede progress for a while.

Still, it’s worth noting that the company is making far more money than it was pre-pandemic. The rise in content creation and recovery in live events also bode well for Focusrite’s earnings outlook.

Having once traded well above 30 times forecast earnings, shares now change hands for a much-more-reasonable P/E of 18. I suspect opening a position now could prove lucrative for me in the medium term.

CVS Group

Another growth share I might begin buying is veterinary services provider CVS Group (LSE: CVGS). The shares might not have had such a bad 2022 compared to Focusrite. Nevertheless, an 18% reduction is still significant.

In my opinion, CVS has great defensive qualities. I reckon the vast majority of pet owners won’t be cutting down on how much money they spend on their furry (and not so furry) companions, even as prices rise. This becomes even more likely when it concerns the latter’s health.

The jump in pet ownership — and the fact that many of these animals will be family members for many years — should also mean earnings keep growing.

Naturally, at least some of this is already reflected in CVG Group’s valuation of 20 times forecast FY23 earnings. That’s not cheap and there’s a chance the shares could dip lower if global markets continue to wobble. However, I’m tempted to begin nibbling now.

SDI

A final growth share I’ll highlight is SDI Group (LSE: SDI). Of the three mentioned here, its share price has performed the best in 2022. This is not to say that the 16% fall has been easy for existing holders to bear.

SDI designs and manufactures scientific products for use in digital imaging and sensing. That doesn’t strike me as cyclical work. In fact, this month’s trading update shows just how well the small-cap is doing.

The company expects both revenues and profits for the last financial year to “materially exceed current market expectations“. Chairman Ken Ford also believes SDI’s acquisition strategy and commitment to ongoing investment should make FY2023 its “best year yet“.

Naturally, no investment is without risk. My biggest issue here is that the valuation (20 times earnings) is fairly high compared to industry peers

For a company that’s consistently grown annual earnings for quite a while now, I think it’s a risk worth taking.

The post I’d buy the dip in these quality growth shares appeared first on The Motley Fool UK.

Stephen Wright: Rightmove

My top growth stock for May is Rightmove. Its business generates around £226m in operating income using just £12m in fixed assets, and its dominant market position is protected by a strong network effect.

As a result, earnings have increased by 200% over the last decade, pushed along by share buybacks. It also has an extremely strong balance sheet with more cash than debt. I’ve been admiring this company for a while, and I’m excited to have finally had the share price reach a level that I’m happy buying it at.

Stephen Wright owns shares in Rightmove.

Royston Wild: Hochschild Mining

I think there’s a good chance precious metals prices could soar as worries over global growth and soaring inflation increase. For this reason, I’d buy silver miner Hochschild Mining (LSE: HOC) for my portfolio in May. 

Mounting concerns over possible stagflation could boost silver prices in the near term. And over the longer term, they could increase as improving economic conditions likely supercharge industrial demand for the dual-role grey metal. 

City analysts think Hochschild’s earnings will rise 8% in 2022. They believe the company’s bottom line will improve 26% in 2023, too. 

Current projections leave the South American mining stock looking quite cheap as well. Today, Hochschild trades on a price-to-earnings (P/E) ratio of just 9 times for 2022. FTSE 100-quoted silver miner Fresnillo’s forward multiple sits at double this level. 

Royston Wild does not own shares in Hochschild Mining or Fresnillo. 

Edward Sheldon: Calnex Solutions

My top growth stock this month is Calnex Solutions (LSE: CLX). It specialises in testing and measurement services for telecommunication networks.

Calnex has generated strong growth in recent years on the back of the rollout of 5G network technology and looking ahead, I think it’s likely to continue doing so. Recently, the group advised that it was seeing “high demand” for its testing solutions and that its order book was sitting at “record levels”. It added that the board was confident it can deliver “significant, sustainable growth” over the coming years.

It’s worth pointing out that Calnex shares have had a good run recently, so they could experience a pullback in the short term. In the long term, however, I think they could go much higher as the company grows its revenues and profits.

Edward Sheldon owns shares in Calnex Solutions.

G A Chester: Impax Asset Management 

My rule of thumb for asset managers is they may offer value if priced at less than 3% of their assets under management (AUM). 

The last time I looked at fast-growing sustainable investing pioneer Impax Asset Management (LSE: IPX), its shares were trading at over £11. The market capitalisation was £1.5bn, meaning it was priced at 4.7% of its £32.2bn AUM. 

As I’m writing, the shares are below £7, the market cap is £910m, and it’s priced at 2.4% of £38bn AUM. Despite market and fund-outflow risks, I think Impax now offers value. Its half-year results are scheduled for 1 June. 

G A Chester has no position in Impax Asset Management. 

Zaven Boyrazian: Focusrite

Focusrite (LSE:TUNE) is a global audio equipment manufacturer targeting music industry professionals and hobbyists at home. Despite live events being cancelled during the pandemic, demand for its award-winning products continued to rise as artists shifted to working from home.

Music festivals are now back in business, restoring a portion of lost income. Yet recent supply chain disruptions have led to a slowdown in sales, sending the share price in the wrong direction.

However, the nature of the problem is ultimately short term. And with management’s long-term strategy uncompromised, the recent tumble looks to me like a fantastic buying opportunity for my portfolio.

Zaven Boyrazian does not own shares in Focusrite.

Christopher Ruane:  S4 Capital

Digital ad agency group S4 Capital (LSE: SFOR) saw its shares fall sharply after 2021 results were delayed twice. That has made me more nervous about governance at the company. But boss Sir Martin Sorrell has promised to fix that. I expect him to deliver.

Meanwhile, the unaudited results showed very high sales growth. S4 says 2022 has started ahead of already strong expectations. Any further governance slips are a risk. But the selloff looks overdone to me at this point. I am strongly considering topping up my position.

Christopher Ruane owns shares in S4 Capital.

John Choong: Rolls-Royce

Rolls-Royce (LSE: RR) recently posted a trading update, and it showed quite a bit of promise in recovery. Despite its flawed balance sheet, the firm is making some progress as it estimates to achieve positive free cash flow by Q3 this year.

Its other segments in defence, power systems, and new markets also posted encouraging developments, as orders continued to increase. Rolls-Royce is also set to grow its revenue in the low-to-mid single digit percentage range. So, with the share price below £1, this could be an opportunity to grab shares on the cheap and capitalise on the potential rebound.

John Choong has no position in any of the shares mentioned.

Paul Summers: AJ Bell

The awful performance of stock markets combined with the rise in the cost of living has hit trading at investment platforms such as AJ Bell (LSE: AJB). However, this is just the sort of quality growth stock I’d want to load up on in anticipation of a big recovery. 

A P/E of 25 isn’t cheap but it’s a far more palatable valuation than a year or so ago. This company consistently generates great margins and returns on capital.

With more people recognising the importance of planning for retirement, AJ Bell is one to tuck away, in my view.

Paul Summers has no position in AJ Bell

Roland Head: Standard Chartered

A FTSE 100 bank might seem an odd choice for a growth stock. But shares in Asia-focused Standard Chartered (LSE: STAN) look very cheap to me when compared with City growth forecasts.

Analysts’ estimates suggest StanChart’s earnings could rise by 15% this year and by 30% in 2023. But despite this bullish outlook, the bank’s shares still trade at a near-50% discount to their 1,120p book value.

Property losses in China and recession risks are a concern. But if CEO Bill Winters can deliver on Standard Chartered’s turnaround potential, I think the shares could perform very well.

Roland Head has no position in Standard Chartered.

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Music to my ears

Let’s kick off my best-shares-to-buy-now list with an under-the-radar stock operating within the world of music. Focusrite (LSE:TUNE) is a global audio product manufacturer. It designs high-quality audio equipment within the music industry, both for studios and live events, under numerous brands, including Novation, AMPIFY, and Sequential.

Since the start of the year, the shares have dropped by nearly 20%, despite early trading results being promising. Management expects revenue for the first half of the year to land at around £91m. That’s actually down from £95.3m a year ago. But considering the operating environment with ongoing supply challenges for electronic equipment, seeing an almost flat comparative performance is quite encouraging.

If the group misses this target, it could open the door to further volatility. However, since these hurdles appear to only be a short-term problem, the drop in the stock looks like a potential bargain. That’s why I think they could be an excellent addition to my Stocks and Shares ISA.

Bouncing back

Domino’s Pizza Group (LSE:DOM) hasn’t had the greatest start to the year, falling by 17% over the last three months. But those days may soon be over. For several years, management has had to deal with a minor conflict with its franchisees over certain aspects of their agreements. But that was under old leadership. And the new administration seems to have finally fixed this multi-year problem.

With more aggressive advertising budgets, new technological innovations, and additional customer collection options, the business seems to be on track to significantly expand its top line, taking profit margins with it.

That certainly sounds like the best shares to buy now, in my opinion. But there are, of course, risks to this new strategy. With the company relying more heavily on digital systems, any cyber security breach could severely disrupt operations, creating opportunities for competitors. Nonetheless, the potential returns make this risk worth taking, in my mind. And that’s why I’m considering this business for my Stocks and Shares ISA today.

Kitchen king

After the pandemic created a jump in demand for home improvement, Howden Joinery Group (LSE:HWDN) came onto my radar. The firm is a vertically integrated kitchen and joinery product manufacturer for the home construction sector.

That may not sound like the snazziest stock out there. But with a track record of delivering an average 11% annual revenue growth with a degree of consistency, now could be the perfect time to add it to my Stocks and Shares ISA.

Supply chain disruptions combined with rising labour costs could significantly impact profit margins. And with larger fish in the pond, passing on the cost to customers may prove difficult if they can simply switch to a cheaper competitor. Yet, this impact has yet to materialise, which is why it’s on my best shares to buy now list.

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Sweet music

Focusrite is a designer and manufacturer of audio equipment and software. More specifically, it professes to be one of the best in the world at making audio interfaces. An audio interface is key to ensuring music is recorded well ready for distribution. Prior to this, Focusrite used to also make music consoles before technology evolved.

As I write, Focusrite shares are trading for 1,460p per share. At this time last year, shares were trading for 976p, which equates to a 49% return.

Why I like Focusrite

The music industry took a major hit when the pandemic began back in 2020. With restrictions in force, many events, gigs, and concerts of all shapes and sizes were cancelled or rescheduled. With the vaccine roll out and pandemic easing from its peak, demand for music and audio equipment is rising once more. In addition to this, Focusrite also possesses a home studio product range that mitigated the impact of the pandemic.

Focusrite’s released full-year results for 2021 in November which helped support my belief it could be a fruitful FTSE stock to add to my holdings for the long term. It confirmed revenue increased by 34% compared to 2020 levels. Gross margin increased by 2.4% and this helped boost operating profit by a mammoth 353% compared to 2020 levels. Net cash also increased boosting a healthy balance sheet. The cherry on top was a dividend of 5.2p per share too.

Focusrite’s increased demand, full-year results, and current pandemic outlook have led analysts to estimate 2022 revenue will surpass 2021 revenue by at least 2%. If this were achieved, I believe Focusrite shares could double my money in 2022. Over the past five years, shares have returned just short of 600%, so a 100% return is feasible in my opinion.

FTSE stocks have risks

Focusrite’s current momentum could be derailed by the ongoing pandemic. Despite vaccine roll out and pent up demand helping boost financials and performance, any new variant of the virus could lead to restrictions and cancellations of events. This could hamper momentum and projected growth. In addition to this, competition in the music equipment industry is intense. All firms out there will be attempting to recover from pandemic woes and this could also affect any progress for Focusrite.

At current levels I would add Focusrite shares to my holdings. It is a FTSE stock with a track record of growth and recent results are encouraging. Analysts also seem to back the stock to grow with recent projections. Focusrite is on an upward trajectory, is being boosted by pent up demand, and pays a dividend. I believe I could double my money in 2022 if I add the shares to my holdings now.

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Having said that, as the vaccine rollout continues and companies accelerate their recovery, the FTSE 100 has made a bit of a comeback. Over the past 12 months, its price has risen by over 11% and consequently, it’s on the verge of returning to pre-pandemic levels. But even if it can continue delivering these returns moving forward, I’ve spotted three individual growth stocks that I’d buy today instead.

The music industry is back with a vengeance

With the pandemic spreading worldwide, the music sector suffered a major blow as live events, and recording sessions had to be delayed or cancelled. But despite this inconvenience, Focusrite (LSE:TUNE) stormed ahead. The company is a designer and manufacturer of audio equipment and software.

Relatively speaking, this is quite a niche market with a lot of competition. And cancelled live events did disrupt its income from equipment sales and rentals. However, management was more than able to mitigate the impact through its home-studio products.

As such, revenue continued to surge by double-digits, and the stock has followed suit, beating the FTSE 100’s 12-month performance by 53%!

Improving consumer health with flavour

There continues to be increased awareness of general wellbeing, thanks in part to the pandemic. And that’s what brought Treatt (LSE:TET) onto my radar. This chemicals company uses organic materials to create flavours and fragrances for the beverage, consumer healthcare, and perfume industries. Most notably is its work to find sugar alternatives in the fight against obesity.

The group has suffered at the hands of Covid-19 as its supply chains have been challenged. It’s had to contend with inflationary pressures regarding the purchase of raw materials. However, management must have successfully passed these increased costs onto customers because profits are up.

Just like Focusrite, Treatt has also outperformed the FTSE 100 index over the past year, generating a return of 64% for shareholders.

Outperforming the FTSE 100 with electricity

With travel restrictions brought in to slow the spread of the virus, Tracsis (LSE:TRCS) also saw a slowdown in demand for its services, and its profits suffered considerably for it. So it’s not surprising that debt levels are significantly higher today than before the pandemic. But that soon might no longer be a problem.

This group provides a range of transport solution services, including using electrical signals to detect irregularities within railway lines. It’s also a niche target market. But maintaining Britain’s railways remains essential to the recovering domestic travel sector. And with the government planning to upgrade the UK rail network, Tracsis looks like it’s got plenty of growth opportunities ahead.

This is all my opinion, of course. But the market seems to agree. This stock has climbed 57% in the last 12 months, vastly outperforming the FTSE 100 index.

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