US-listed growth stocks such as Apple and Tesla are very popular right now. You shouldn’t ignore UK growth stocks, however. On the London Stock Exchange, there are plenty of exciting companies delivering huge returns for investors.
Here, I’m going to highlight what I consider to be five of the best UK growth stocks. All of these businesses have registered five-year average revenue growth of at least 20%, meaning they’re growing rapidly, and are already very profitable.
The best UK growth stocks
One of my favourite UK growth stocks is ASOS. It’s a global leader in the online fashion space. Over the last decade, it’s grown phenomenally. In FY2009, sales were £163m. In FY2019, sales were £2,734m.
I think this could still be the start of the growth story however. The shift to online shopping still has far to run. Between now and 2024, the fashion e-commerce market is forecast to grow at 9.4% per year. And ASOS has plenty of room for growth in international markets such as the US. Looking at the growth story, I think the stock has the potential to climb much higher over the long term.
Operating in the same space is Boohoo. It’s an online fashion retailer and owns a number of brands including Boohoo, BoohooMan, PrettyLittleThing, and Nasty Gal. It’s growing at an incredible pace – over the last five years sales have surged from £140m to £1,235m.
Boohoo is a very clever company. Not only has it tapped into the Millennial market very effectively through social media but it’s also developed key partnerships with high-profile celebrities. I think there’s plenty more to come from Boohoo. In my view, the shares have considerable upside potential.
Another industry with big growth potential is video gaming. Already, this industry is valued at over $150bn. However, between now and 2027, the industry is expected to grow at around 13% per year.
One UK growth stock that’s likely to benefit from this industry growth is Keywords Studios. It specialises in video game technical and creative services such as functional testing, localisation, and art creation. It works with most of the world’s major video game developers such as Activision Blizzard (Call of Duty) and Epic Games (Fortnite).
Sales here have climbed from €37m to €327m over the last five years alone. That’s a fantastic rate of growth. I expect KWS to keep growing as video gaming becomes more popular.
Under-the-radar UK growth stocks
Further down the market-cap spectrum is dotDigital, an under-the-radar technology company that offers a cloud-based marketing automation platform. I think this is another top UK growth stock.
DotDigital has an impressive growth track record. Over the last five years, sales have climbed from £16m to £43m. I see the potential for plenty more growth as the company expands internationally in the years ahead. It should benefit from the shift to online shopping.
Finally, I also like Alpha FX. This is a founder-led company that offers foreign exchange hedging services to businesses. Its clients include ASOS and Halfords. Over the last five years, sales have climbed from £3m to £35m.
AFX is a very profitable company with a strong balance sheet. All things considered, I see it as one of the best UK growth stocks at the moment.
The post I think these are 5 of the best UK growth stocks right now appeared first on The Motley Fool UK.
Edward Sheldon owns shares in Apple, ASOS, Boohoo, Keywords Studios, dotDigital, and Alpha FX. The Motley Fool UK owns shares of and has recommended Activision Blizzard, Apple, and Tesla. The Motley Fool UK has recommended Alpha FX, ASOS, boohoo group, dotDigital Group, and Keywords Studios and recommends the following options: long January 2022 $75 calls on Activision Blizzard and short January 2022 $75 puts on Activision Blizzard. 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.
Motley Fool UK 2020