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Highlights
- Investors pay a high price for investing in growth stocks, which also lowers safety margins.
- Revenues and earnings of growth stocks are likely to grow at a rate significantly higher than its peers in that industry.
- Rakon, Heartland and PGG Wrightson are some of the leading growth stocks.
The growth stock of a company delivers considerable cash flow compared to an average company operating in the same industry. In addition, earnings and growth are anticipated to grow at a rate significantly higher than its peers in that industry.
Investors have a particular preference towards these stocks as they are voluntarily affirming to pay a higher premium to draw further growth prospects.
Amid this backdrop, let’s glance through the 5 fastest growing NZX stocks this year.
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Rakon Limited (NZX:RAK)
Advance frequency control and timing solutions provider, Rakon, registered a jump of 308% in NPAT to $18.9 million and a rise of 132% in its underlying EBITDA to $26.4 million for the six months ended 30 September 2021.
DO READ: Rakon (NZX:RAK) reports revenue growth in 1H22 results
RAK’s core business continues to grow as it was bolstered by huge demand, particularly from 5G, data centres and industrial placement-centred firms. It has projected an underlying EBITDA in the range of $44 million and $49 million for the year ending March 2022.
RAK ended the day 1.96% in green to close at $2.08.
Heartland Group Holdings Limited (NZX:HGH; ASX:HGH)
HGH provides banking services via its subsidiaries. Heartland Bank (NZ-owned) was named Canstar’s Bank of the Year – Savings in July 2021 due to its robust blend of products, savings, features, tools and flexibility.
It reported an NPAT of $87 million in FY21 and remains on track to meet its revenue target of $93-$96 million.
HGH ended the day unchanged to close at $2.52.
PGG Wrightson Limited (NZX:PGW)
Key supplier to the NZ agricultural sector, PGG Wrightson, witnessed a robust trading performance in the first quarter of FY22. The Group witnessed positive signs in the period as farmers and grower clients geared up for their production needs.
RELATED READ: 5 NZX Agriculture stocks that can be good options ahead of 2022
The Group raised its operating EBITDA guidance last month to nearly $58 million for FY22 due to outstanding trading in H1 FY22.
PGW ended the day unchanged to close at $5.1.
Briscoe Group Limited (NZX:BGP; ASX:BGP)
A prominent sports and goods retailer, Briscoe, clocked a growth of 9.52% in its overall sales, making total sales of $496.9 million for the 39 weeks period ended 31 October 2021.
ALSO READ: Which top 3 NZX stocks are trading under NZ$1?
The Group anticipates an NPAT of nearly $85 million for FY22, in spite of COVID-19-induced disruptions seen in Q3.
BGP ended the day unchanged to close at $6.82.
Fletcher Building Limited (NZX:FBU; ASX:FBU)
Building products manufacturer, Fletcher, registered a robust revenue of $8.1 billion and net earnings of $305 million in FY21.
ALSO READ: Fletcher (NZX:FBU): Would the Company perform well in upcoming results?
Lockdowns have resulted in subdued trading in FY22 so far, but the Group expects trading levels to improve as AU and NZ reopen after increased vaccination levels.
FBU ended the day 1.08% in red to close at $7.33.
Bottom Line
Though investing in growth stocks can be lucrative but is not risk free. Investors need to purchase high-priced stocks to tap growth prospects, which also lowers the safety margin.
(NOTE: Currency is reported in NZ Dollar unless stated otherwise)