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1 under-the-radar growth stock to buy in March

Young brown woman delighted with what she sees on her screen
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Growth stock investors might be finding it a bit hard to pick up good-value buys right now.

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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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Focusrite Plc and Games Workshop Group Plc. 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.

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