- Companies that grow at a faster rate than their peers and above the industry average are termed as a growth stock.
- Investors looking for investment in the growth stock should look for companies with good management, innovative technology and strong sales.
- Essensys Plc, DotDigital Group Plc and Actual Experience Plc are some of the stocks trading on LSE, which can be called growth stocks.
Growth stocks are companies that are expected to grow at a faster rate than the industry average and outpace their peers in earnings and stock performance. These companies achieve the higher growth rate because of multiple factors such as:
- The company has industry-leading technology, giving it a competitive advantage, and people are rapidly adopting its products and services.
- Growth stock companies could be operating in the sunrise industry like electric vehicles or renewable energy segment that are expected to grow faster than average industry growth in the country.
- The company could be using an innovative technology that gives higher productivity and efficiency in operations than its peers, which gives a competitive advantage and is reflected in the stock performance.
When investing in the growth stock, investors should look for the stock with good management, innovative technology or business model, and strong growth in future sales.
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Let us take a look at 5 FTSE listed growth stock:
Essensys Plc (LON: ESYS)
The London-based company provides workplace software and cloud services to the workplaces industry. The company serves workspace providers, landlords, real estate providers. The company’s products and services have penetration in more than 20 million sq. ft. of office space across 170+ cities. The company’s stock is listed on the London Stock Exchange and is the FTSE AIM all-share index constituent.
The company has reported higher revenue growth for the last three years and reported positive pre-tax profits of £0.35 million last year. The company’s range of software products enables property owners to convert their existing property stock to flexible offices, which provides the company with many business opportunities.
In the last one year, Essensys Plc has given 94.95% returns to its shareholders and has a market cap of £193.80 million as of 28 July 2021.
DotDigital Group Plc (LON: DOTD)
The company is a leading provider of software as a service (SaaS) and email marketing services to digital marketing professionals. Over 70,000 marketers from 156 countries use the company’s marketing platform.
In its results for the year ended 30 June 2021, the company stated that the revenue was up by 23% at £58.1 million (FY2020 revenue: £47.4 million) with a strong cash balance of £32 million, much ahead of market expectations. The average revenue per user also rose by 16% to £1,251 per month. The company is expected to benefit from the rise in online shopping and e-commerce growth and grow further as it expands its services globally.
In the last one year, DotDigital Group Plc has given 112.61% return to its shareholders and has a market cap of £733.37 million as of 28 July 2021.
Alpha FX Group Plc (LON: AFX)
Alpha Group Plc provides foreign exchange services and currency risk management to the cooperate entities. It provides the currency hedging services like forward contracts, options contracts, and payment collections.
The company’s half-yearly revenue increased by 89% to £34 million (FY2020 revenue: £18 million), while its client base saw a jump of 11% to 838 clients. Over the last five years, the company’s revenue increased from £8.48m to £46.22m. It has a profitable business model along with a strong balance sheet.
In the last one year, DotDigital Group Plc has given a 101.2% return to its shareholders and has a market cap of £671.6 million as of 28 July 2021.
Actual Experience Plc (LON: ACT)
The UK-based analytic company provides the analytic software service for corporate entities. The company analyses the digital network of business using its patented technology and shows where the company can put its incremental resources to deliver cost savings.
The company’s revenue has been growing year on year. The company business model is very different, which helps the business entity save money and its products and service are useful in the work from the home environment as well.
In the last one-year, Actual Experience Plc has given 44.22% returns to its shareholders and has a market cap of £59.49 million as of 28 July 2021.
Diaceutics Plc (LON: DXRX)
The company operates in the very niche segment of precision and personalised medicine within the pharmaceutical segment. It provides its services to the 36 largest global pharmaceutical companies. Diaceutics Plc products and services are focused on optimising its clients’ strategies for the development and launch of precision medicines.
The company acts as the middleman between the pharma company and the laboratories and hence has multiple revenue sources. The personalised medicine industry has growth potential in the long run where the focus of the companies is to give such drugs to the patient, which should actually work without nasty side effects. Diaceutics Plc, with its expertise and innovative technology, could capture these business opportunities and gain market share.
In the last one year, Diaceutics Plc has given a negative return of 38.8% to its shareholders as clinical trials and personalised medicine development has slowed down because of pharma companies increased focus on COVID related vaccine development which impacted Diaceutics Plc growth. The company has a market cap of £91.64 million as of 28 July 2021.