Best UK Growth Stocks 2024
Growth stocks are often championed by some investment analysts as investing in its purest form: buy a fledgling company in the early days, and watch it grow to maturity. This article explains what exactly growth investing is, as well as the pros and cons of investing in the best UK growth stocks. A list of some of the best UK growth shares to watch is also provided.
Table of Contents
What are UK Growth Stocks?
UK growth stocks represent companies which investors and investment analysts expect to grow rapidly in the coming years. Investing in the best UK growth stocks stands opposed to value investing and dividend investing, where the focus lies on investing in large and established businesses, or businesses that pay reliable dividends, respectively.
Instead, growth investing is an investment philosophy of buying a business before it has entrenched itself into its respective market. Though, this is not always the case. Some businesses that are already patently large can still experience rapid growth. It’s all a question of how a company is achieving that growth and what its prospects are.
Identifying growth stocks can be difficult, as no hard definition exists. Investors use different metrics like revenue growth, earnings per share growth, or price-to-earnings ratio growth, among others, though the method remains a subjective one.
Growth investing in UK shares means investing for the long term. It can take a business many years or even decades before its products or services reach full market saturation. Moreover, there is no guarantee that it will ever happen.
Best UK Growth Stocks to Watch
Investors should be mindful of the fact that whatever constitutes the ‘best’ UK growth stock is subjective. The answer will differ based on an investor’s financial situation and goals. Some factors to consider include an investor’s risk appetite, time horizon and amount of capital, among others.
How have the UK growth stocks been selected?
The best UK growth stocks in this list all have a Trailing Twelve-Month revenue growth and earnings per share growth above 25%, meaning they are growing at a rapid pace - as defined by this metric. It is important to note, however, that past performance is not indicative of future results.
- Diageo – Worldwide Distributor of Famous Liquors
- Carnival – Cruise Line Operator With 91 Vessels
- Glencore – World’s Largest Commodity Trading Company
- Greggs – Former Bakery Chain Pivoted to Food-on-the-Go Stores
- Oxford Instruments – Producer of Magnets and High-Tech Parts for Scientific Machinery
Drinkers of the famous Guinness beer might recognise the name Diageo, as it is the name of the current company behind the beverage. Diageo was founded in 1997 when Guinness plc. and Grand Metropolitan plc. merged. Diageo owns or has owned many famous brands in the past two decades, including Burger King and Pillsbury.
Diageo is active all over the world, deriving most of its revenue from the European and North American markets. In 2013 it achieved a majority stake in United Spirits, a liquor distributor in India. Most of the company’s revenue is earned through the sales and distribution of famous liquors like Guinness, Smirnoff, Captain Morgan, and Johnnie Walker. It also owns several whiskey distilleries like Cragganmore and Glenkichie. Diageo currently has a market capitalisation of around 62.9 billion pounds.
Carnival is a British-American cruise operator with more than 90 vessels. The company was founded in 1972 and held its IPO around 15 years later, in 1987. Throughout these decades, the company has merged with and acquired several other cruise-operating companies, steadily growing its base of operations and revenue in tandem.
Currently, Carnival operates nine cruise line brands and one cruise experience brand, with a combined fleet of 91 vessels. Its revenue in 2023 was $21.6 billion, a staggering $9 billion above its revenue in 2022. The company operates cruises in the United States, the UK, Italy, Germany, and since recently, in Hong Kong, and China. Its current market capitalization is $21.9 billion.
Glencore plc. is a multinational commodity trading and mining company headquartered in Switzerland. As of July 2022, it is the world’s largest commodity trader, trading in goods like metals and grains. In 2011 Glencore held its IPO in a dual listing in London and Hong Kong. At the time, the company was valued at around $60 billion. Just a year or so later, Glencore merged with Xstrata, a British and Swiss multinational mining company which had served as a marketing partner for Glencore in the past.
Currently Glencore plc. employs around 135,000 people. Its revenue totalled $107 billion in the first half of 2023, roughly 20% less than the $134 billion it posted in the first half of 2022. The company has stated in its half-year report that this decrease in revenue is due to falling commodity prices. Glencore has a current market capitalisation of around 54 billion pounds.
Greggs plc. is a British bakery chain that produces both savoury as well as sweet baked goods like sausage rolls and doughnuts. The company was founded in 1939 by John Gregg, just before the Second World War. A good 25 years later, John Gregg’s son Ian took over the business and began expanding and acquiring other bakeries in the decades that followed.
Greggs opened its 1500th store in York in 2011, truly positioning itself as the go-to store for the Englishman on the hunt for a warm treat from the oven. Several years later, however, the company decided to pivot, as it reasoned it could no longer compete with supermarkets for sales of breads, scones, and other baked goods. Instead, Greggs began to focus its operations on ‘food on the go’ by adjusting its opening hours to open earlier and close later and expanding their breakfast menu.
Currently Greggs sports more than 2,300 locations all across Britain, employing more than 21,000 people. Its revenue in 2023 topped 1.8 billion GBP, a good 300 million GBP above its revenue in 2022.
Oxford Instruments (OXIG)
Oxford Instruments was founded in 1959 when it began manufacturing superconducting magnets for use in scientific research, the company is a commercial offshoot of the University of Oxford. Its headquarters are in the UK, with other offices located in the US, Europe, and Asia.
Oxford Instruments still makes magnets, along with other parts for use in microscopy, MRI machines, optical imaging and low-temperature systems. The company currently employs around 2000 people and had a revenue of 444 million GBP in 2023, quite a bit above their revenue of roughly 370 million GBP in 2022.
How to Invest in UK Growth Stocks
With Admirals, you can trade and invest in global shares with the following commissions:
- UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission.
- US stocks and ETFs – From $0.02 per share, 1 USD minimum commission.
- France/Germany stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission.
You can learn more about trading and investing commissions on the Admirals Contract Specification page. You can search for global stocks and ETFs from the MT5 web platform and invest in four steps:
- Open an account with Admirals.
- Click on Trade on one of your live or demo trading accounts to open the web platform.
- Search for your symbol at the top of the search window.
- Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Pros & Cons of Investing in UK Growth Stocks
In terms of upsides, investing in the best UK growth stocks can mean investing in businesses that can innovate to the necessary level required to give them a market edge. A business that has proprietary knowledge of how to produce certain products might be able to outshine its competitors for years or even a decade or more. If the growth investor manages to identify such a business early, then such a company may long earn its place in an investment portfolio.
Another potential upside of investing in the best UK growth shares is that of diversification. Growth stocks are often not exactly correlated with the shares of an average company, meaning growth stocks could almost be seen as an asset subclass of stocks in general. Some investors might choose to use that to their advantage, by investing a part of their portfolio into growth shares.
As a downside, investing in the best UK growth shares can entail higher levels of risk than the market average. This is because growth companies are often newer and unproven businesses that have a higher chance of failing than the established company a value investor might choose to include in their portfolio. Or, if an established company is seen to be growing using financial ratios and metrics, the growth may be capped far sooner than a newer company.
Another downside is that identifying the best UK growth stocks can be challenging. Often these companies are difficult to value according to their books and current assets, as it is the promise of future growth and revenue that makes them potentially worthwhile. Therefore, the growth investor might need to spend more time researching the best UK growth stocks for them.
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FAQs on Best UK Growth Stocks
What are growth stocks?
Growth stocks are the shares of companies that are expected to grow rapidly in the coming years, usually thanks to some nifty innovation that will allow them to capture a large market share. A growth investor tries to identify such businesses and invest in them before they become established, household names. Some growth investors will look at established companies that still have room to grow and market share to gain.
What are the best UK growth stocks?
Whatever makes for the best UK growth stocks will differ on an investor-to-investor basis. Things like the time horizon, risk tolerance, or the available investment capital determine the best UK growth stocks for a given investor. Investors would do well to perform their own research. Some UK growth stocks to watch include Diageo, Carnival, Glencore, Greggs and Oxford Instruments.
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