Yahoo Finance Four of the fastest-growing stocks investors should buy
Trying to find the fastest-growing stocks in the hope they will become world-leading companies is not the right strategy for every investor. But for those investing for the long term, who can stomach violent share price swings, the rewards can be immense.
Buying the right companies is no easy task, however. “Growth” investors search for companies that are growing their sales substantially every year. While they may not always be profitable, investors in these companies are betting that by getting in early, they will reap big rewards when their strong growth leads to profits.
It can be a risky strategy, but fund managers believe the following stocks boast both the strong sales growth and resilient business models needed to make them compelling investments.
Sensyne Health
British healthcare technology firm Sensyne Health uses anonymous patient data to accelerate the development of new medicines.
Neil Goddin, manager of the Artemis Positive Future fund, said Sensyne was changing how drugs were developed and the treatment given to sick patients. “It has over 10 apps being used today, ranging from self-monitoring of blood glucose levels and coronavirus monitoring, right through to monitoring of heart failure. Now revenues are really taking off,” he said.
The first year of sales – 2018 – generated £81,000 in revenue. In 2019 this grew by 68pc, before explosive growth last year, when revenue surged 1,500pc to more than £2m. By the end of 2024 sales are expected to have risen to £80m, according to Mr Goddin.
Sensyne's share price performance offers a glimpse of how volatile growth stocks can be, however. After floating in 2018 at 175p per share, they tumbled to a low of just over 31p, before rising nearly five-fold to today's 150p price.
Beyond Meat
Plant-based “meat” products are rising in popularity but the growth of the sector has only just begun, according to Mr Goddin. He picked America's Beyond Meat as the company likely to reap the biggest rewards from the rise of meat-free alternative foods.
“Beyond Meat has a first-mover advantage. Since launching in 2016, sales have grown annually by 101pc, 176pc, 233pc and 37pc last year, when it was badly affected by the pandemic. Growth is expected to be around 40pc next year and 50pc the year after,” he said.
Mr Goddin said Beyond Meat's products tasted as good as meat and would eventually be priced competitively versus real meat. After floating on the stock market at $25 per share in 2019, Beyond Meat has soared five-fold to $126 per share.
Gamma Communications
This British company is challenging traditional telecoms companies by allowing businesses to shift all their communications online.
Matt Tonge, manager of the Liontrust UK Micro Cap fund, said Gamma was delivering double-digit sales growth and taking market share from lethargic telecommunications heavyweights.
“The business has also recently moved into Europe, which has a similar market structure to that of the UK, albeit the Continent is a lot further behind in its move to modern technologies – hopefully providing a runway of growth for many years to come.
“It is a relatively rare instance of a stock that possesses all three of the core features our investment process looks for: high recurring income, strong distribution networks and good intellectual property,” he said.
Gamma's shares have surged five-fold in the past five years and its revenue has risen 18pc annually for the past three.
Belvoir
Belvoir is now Britain’s largest lettings agency, housing nearly 440 individual businesses across six brands covering residential lettings, property sales and property-related financial services.
Mr Tonge said the company was adding new revenue streams, pointing to its expansion into financial services with the acquisition of mortgage brokers.
“This has enabled Belvoir to grow in a very capital efficient manner. With a book of over 65,000 properties under management, Belvoir also generates a good level of recurring income – a valuable asset which has proven itself in tough times – and is also currently benefiting from the pent-up demand being released in the housing market,” he said.
Belvoir's revenues have risen 24pc annually for the past three years and its shares are up 118pc over the past 12 months.
