Have £1,000 to invest? Here are 2 growth stocks I’d put my money on

I believe that these two growth stocks could make investors a lot of money.

| 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.

If you’re looking for growth stocks as the foundation of a long-term portfolio, then I wouldn’t look any further than the following two companies. These two businesses have established themselves as growth stocks that continually perform above what is expected of them.

Home furnishings giant

Dunelm (LSE: DNLM) is a business that continues to defy expectations and to outperform predictions. The share price is an impressive 82% higher than it was at this time last year, but at 962p, I believe it’s still reasonably priced. The current dividend yield is fairly modest at 2.8% but with dividend cover of 1.6, it’s well covered and I believe that it could be set to rise in the future.

Dunelm has been a standout performer in the FTSE 250 this year and its pre-tax profits forecast has been increased to £125m for the year ending in June, up 4% from the previous prediction of £120m. The less-than-perfect summer weather may be blamed by many retailers for their problems but it has proved to be positive for this business, as more people seem to be focused on home furnishings than they would be in a heatwave. The focus on its online ops means it easier than ever for consumers to buy its products, another sign that the company has adapted well to changing customer behaviours and it really is showing in its results.

With on-going strong sales throughout the year and the stock gaining over 8% in the past couple of weeks, I feel that my long-held belief in the company as a worthy target for my investment cash is paying off. I believe that this will be a long-term investment, with dividends hopefully set to increase in the near future.

Warehouse success

Segro (LSE: SGRO) is a warehouse property investment and development company that I think could be one of the best in the UK to invest in thanks to its success this year and the minimal impact Brexit should have on the company. The fact that Segro deals in warehouses supports a consistent and reliable profit margin that will not be affected by the changes in the wider property market. The stock has risen over 20% this year and is currently priced at around 734p with a P/E ratio of 7, which may be low but it gives me confidence that this share is a bargain. The low P/E seems to be a result of the scepticism surrounding property companies due to Brexit changing and challenging the industry.

The current dividend yield is only 2.5%, which isn’t the most exciting payout among UK stocks, but it beats inflation and the firm is still consistently putting money back into investors’ pockets. And there’s clearly a dividend growth focus from the board. Segro’s payout to shareholders has increased by 60% in the past few years and if this continues, we could be looking at a very attractive dividend in another few years.

I see SGRO as another long-term investment that could give shareholders great rewards in the future. The huge shift towards online shopping has really benefitted it in recent years and demand for warehouses is still rising. Segro is reaping the rewards of its involvement in this sector and its progress looks unlikely to slow down any time soon.

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.

fional owns shares of Dunelm Group. The Motley Fool UK has no position in any of the shares mentioned. 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

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »

Investing Articles

If I’d put £25,000 into the FTSE 350 at the start of 2024, here’s how much I’d have today!

Many FTSE shares have rebounded this year as interest rates look set to keep heading lower and market appetite for…

Read more »

Investing Articles

Up 40%, but experts forecast the easyJet share price could soon hit 664p! Time to buy?

The easyJet share price has been flying lately and stock analysts are predicting more fun to come. But there's only…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »