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Summary
- Growth stocks are the most sought-after choices for investors as they tend to grow rapidly in the short term.
- The returns in the long term can help investors in beating inflation and benchmark indices by huge margins.
- Investors look forward to investing in growth stocks typically as an effective tool for capital appreciation in the long term.
Investing in a business that is anticipated to grow at a faster pace in comparison to the average growth of its peers is often referred as Growth investing. Growth stocks do not distribute their earnings in general. In order to accelerate growth, these businesses often reinvest their earnings. Therefore, the investors look forward to investing in growth stocks typically as an effective tool for capital appreciation in the long term. The returns in the long-term help investors in beating inflation and benchmark indices by huge margins.
Also read: Are Investors Exiting Tech Stocks for Other Growth Sectors?
However, investing in growth stocks could be a risky preposition. Since these stocks do not distribute their earnings, an investor can only make money if the business does well. In case it does not, investors end up incurring losses.
Growth stocks are the most sought-after choices for investors as they tend to grow rapidly in the short term. However, investing in growth stocks could be a tad cumbersome and a huge amount of effort is required to filter stocks with huge growth potential. Therefore, investors must seek professional advice before putting their money in growth stocks.
Copyright © 2021 Kalkine Media Pty Ltd.
In this article, we would put our lens through some stocks which look to have strong growth potential in 2021.
- Clipper Logistics Plc
Clipper Logistics Plc (LON:CLG) is a provider of value-added logistics solutions, e-fulfilment and returns management services to the retail sector to support their online trading activities. Shares of CLG have delivered a double-digit return of 89 per cent in last one year. This means an investment of £10,000 a year ago, could have turned to £18,900.
The pandemic has acted as a catalyst for the logistics industry. The nation including the retailers have relied heavily on the logistics company during lockdowns. The e-commerce transactions have increased manifolds during the pandemic-led lockdowns. The trend of online shopping is expected to continue even after the lockdown restrictions are lifted.
Meanwhile, Clipper Logistics witnessed an extraordinary level of activity in logistics operations across continental Europe and the UK on the eve of Christmas and Black Friday. The company’s revenue from logistics business during November and December surged by 50 per cent compared to previous year for same period. Clipper witnessed strong growth in non e-fulfilment services and e-commerce related activities, according to its recent trading update.
The company has shown strong performance during the first half of the financial year 2021, with 27.9 per cent increase in logistics operations. Clipper carried the same momentum in 2021 after experiencing extraordinary level of activity in logistics operations on the eve of Christmas and Black Friday in continental Europe and the UK. The company continued to enjoy a strong pipeline with multiple growth opportunities. CLG shares last traded at GBX 580 on 25 February 2021.
- Asos Plc (LON:ASC)
UK-based online retailer Asos Plc recorded unprecedented growth of 24 per cent on a constant currency basis in revenue for the four-month period ended 31 December 2020. The company leveraged upon its multi-brand model and online demand during the pandemic-led disruption. Asos recently bought one of the best apparel brands, Topshop for $405 million. Asos shares delivered a double-digit price return of 81.95 per cent in last 52-week period. ASC shares last traded at GBX 5,660.00 on 25 February 2021.
- Pets at Home Group PLC (LON:PETS)
During the Covid-19 induced lockdowns, Pets at Home Group traded as an essential retailer. This allowed the company to post a jump of 18 per cent in revenue to £302 million during the quarter ended 31 December 2020. The company witnessed huge demand in its online and in-store services. The company gained strong momentum across its Retail and Veterinary operations. PETS shares delivered a double-digit price return of 39.65 per cent in last 52-week period. Shares of FTSE 250 listed retailer last traded at GBX 383.00 on 25 February 2021.
