2 super growth stocks I’d buy with £5,000 today

Just £5,000 could help you make a fortune with these super growth stocks.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Feeding the world’s ever-growing population is big business, and with the number of humans on this planet set to hit 9bn by 2050, the food production industry has its work cut out.

One play on this trend is the AIM-traded producer of nutrition, breeding and health products for the global aquaculture industry Benchmark (LSE: BMK).

Building for the future 

For the past two decades, Benchmark has been in investment mode, spending heavily to increase its global footprint and re-investing all of the cash generated from its fledgeling operations back into the business. It now looks as if all this hard work is starting to pay off.

For the six months ended 31 March, adjusted earnings before interest, tax, depreciation and amortisation jumped 91% to £6.3m while adjusted profit before tax hit £4.4m. Revenue for the period grew 9% to £75.7m.

That being said, Benchmark is still ploughing funds back into growth. The firm recently completed a £17m commercial-scale fish vaccine manufacturing site in Braintree and its disease-free fish egg production facility in Norway expects to reach full capacity by 2019. Meanwhile, the group recently tapped shareholders for £12.2m to fund a 49% interest in a “strategically important Chilean JV” giving it a large presence in Chile, the world’s second-largest salmon market.

In my opinion, management is heading in the right direction by prioritising growth over profit at this stage. The global aquaculture market is expected to grow by 5% per annum to reach a market size of $219bn by the year 2022, and it would be silly for Benchmark not to make the most of the market expansion. 

Unfortunately, as the company continues to invest, City analysts are expecting losses to continue for the next few years, but over time, Benchmark’s efforts should really pay off, and I wouldn’t be surprised if a larger competitor buys out the enterprise and its technology before it has a chance to break even.

Follow the money 

Unlike Benchmark, Hikma Pharmaceuticals (LSE: HIK) is already profitable, but growth has hit the rocks in recent years thanks to rising competition and the firm’s own mistakes.

Still, now Hikma is in recovery mode, and it looks as if the business has the unreserved backing of its management. CEO Sigurdur Olafsson recently splashed out £262k to snap up 20,000 shares in the company and was shortly followed by Chief Scientific Officer Surendera Tyagi who spent £20k.

Analysts have soured on Hikma recently because the launch of what was supposed to be a blockbuster generic version of Advair, GlaxoSmithKline’s money-spinning respiratory medicine, has been held back by the US drugs regulator the FDA.

This was supposed to be one of the company pillars of growth in 2018 and 2019, but it now looks as if there will be no approval until at least 2020. In the meantime, the City believes Hikma’s growth will be sluggish with earnings growth of just 5% is pencilled in for this year.

Nonetheless, as with Benchmark, I believe that over the long term, Hikma’s growth will return as the world’s ever-expanding population demands access to more affordable healthcare. The stock might not look cheap today, trading at 20 times forward earnings, but the potential opportunity available to the business over the long term is clear.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves owns shares in GlaxoSmithKline. The Motley Fool UK has recommended Hikma Pharmaceuticals. 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.

More on Investing Articles

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

As the WH Smith share price falls 4% on annual results, is it still worth considering?

WH Smith took a hit after this morning’s results left shareholders unimpressed. With the share price down 4%, Mark Hartley…

Read more »

Investing Articles

The Aviva share price just jumped 4.5% but still yields 7.02%! Time to buy?

A positive set of results has put fresh life into the Aviva share price. Harvey Jones says it offers bags…

Read more »

Investing Articles

Can a €500m buyback kickstart the Vodafone share price?

The Vodafone share price has been a loser for investors in recent years, and the dividend has been cut. We…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Growth Shares

3 mistakes I now avoid when choosing which growth stocks to buy

Jon Smith runs through some of the lessons he's learnt the hard way over the years about what to look…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Should I follow Warren Buffett and sell my favourite shares?

Billionaire US investor Warren Buffett has been selling tons of Apple shares and other stocks of businesses he thinks are…

Read more »

Investing Articles

As like-for-like sales continue to fall, is the B&M European Value Retail SA (LSE:BME) share price a bargain?

B&M European Value Retail is known for its low prices, but could growing like-for-like sales make the share price the…

Read more »

Illustration of flames over a black background
Investing Articles

After rocketing 232% in a year can this red-hot FTSE 250 stock keep going gangbusters?

Harvey Jones says this FTSE 250 stock's on fire after smashing the index over the last year. It's cheaper than…

Read more »

Investing Articles

The Burberry share price has jumped 15% this morning! Time to pile in?

Harvey Jones was thrilled to wake up this morning and find the Burberry share price flying, but he's still sitting…

Read more »