Tesla has been in the news a lot lately. The share price has rocketed and the company has a legion of fans. I’m less convinced by its investment case and think there are shares based here in the UK which could do better in the coming years.
A share price with momentum
One such share is in gaming group Team17 (LSE: TM17). It recently announced a partnership with Chinese company Tencent. The game, Crown Trick, will be launched on the PC and Nintendo Switch platforms later in the year. Team17 shares jumped on this news so any further deals are likely to also prove to be a boon for the share price.
The company is rapidly growing earnings and profits, and reinvests in growth. Since it listed only a few years ago, revenue has rocketed from nearly £30m up to over £61m. To me the balance sheet looks really strong, giving it a platform from which to keep growing.
Lockdown helped boost the share prices of gaming shares. I fully expect that Team17 can keep growing. The business has plenty of potential, a proven business model, and a CEO with a large stake in the company.
An AIM share with growth potential at a fair price
Another smaller company with plenty of potential in the coming years is Begbies Traynor (LSE: BEG). Its shares are much cheaper than Team17’s and yet it’s well-positioned for growth. As businesses struggle because of coronavirus it should pick up more work. That’s because it’s involved in insolvency and restructuring work.
Over the last five years the group has grown revenue from £50m to £70.5m, which is a decent rate of growth for an AIM company. Adjusted earnings per share over the same time frame have gone from 3.2p up to 5.7p.
The shares are not too far off their decade-high, achieved recently. I think the pullback may represent a decent buying opportunity. Especially if you think more businesses might struggle in the coming months.
Doing all the right things
Next (LSE: NXT) is a much bigger beast than the previous two companies. Notwithstanding the general pessimism around retailers, I think Next has some things going for it.
The retailer has a top management team who are switched on to the challenges facing the retail sector as whole. They manage the business conservatively while also moving with the times. It’s this careful management that means debt is well under control and margins are impressive, especially versus other retailers with a high street presence.
The evolution of Next into a business that sells third-party wares via an online marketplace is a shrewd move. This technology-led approach may well help boost sales, even if in the short term it hits margins.
I think the success of Next in the past and the steps it has in place to grow in the future position it to outperform rivals comfortably. As others struggle, it may well also pick up market share and new customers.
