As the government progresses with its reopening plans, I’ve been looking for UK growth stocks to buy for my portfolio. As such, here are three UK mid-cap growth stocks I’d buy to profit from the UK economic recovery.
UK growth stocks to buy
Intermediate Capital (LSE: ICP) is the first enterprise on my list of UK growth stocks to buy. This company is an asset manager that specialises in private debt, credit and equity investments.
I think this could be a great way to invest in the UK and European economic recovery through a diversified basket of assets controlled by a professional manager. The stock also supports an attractive dividend yield of 2.6%. The payout has grown at an annualised rate of 7% over the past six years.
The one significant risk of investing in businesses like Intermediate is there’s limited disclosure on what it owns. As such, it may not be suitable for all investors. There could be skeletons hiding in the closet, which may only appear in a financial crisis.
However, I’m comfortable with this risk, which is why I’d buy the stock for my portfolio today as part of a basket of UK growth stocks.
Homebuilding growth
The UK housing market is currently firing on all cylinders. That’s good news for homebuilder Bellway (LSE: BWY).
Using forecasts presented by the company, City analysts believe group net income will rise to £408m this year, up from £193m in 2020. As the UK struggles to build enough houses to meet demand and home prices continue to increase, I think this figure will increase in the years ahead.
It seems as if all Bellway needs to do is keep building, and buyers will keep buying.
Of course, this trend may not last. House prices can’t go up at 10% a year forever. An increase in interest rates could curb demand for mortgages and send home prices lower.
Higher costs may also prove to be a headache for the business. These could hurt profit margins, reducing profitability and limiting capital available for reinvestment in new dwellings.
Even after taking these challenges into account, I think Bellway remains one of the best stocks to buy right now. That’s why I’d add it to my portfolio.
Tech sector growth
The final company I’d buy for my portfolio of growth stocks is Softcat (LSE: SCT). The IT infrastructure solutions provider has reported explosive growth over the past five years. As technology continues to play an increasing part in our daily lives, I think the group will continue to report growth.
As well as organic growth, it looks to me as if the business has the capacity for acquisitions. At the end of 2020, it had £70m of cash on its balance sheet.
That could provide firepower for deals, or a special dividend for investors. The stock already supports a yield of 1.9%, at the time of writing. This is why I think the stock is one of the best shares to buy now.
Softcat has room for growth, but the firm could face challenges as well. These include competition, which is only growing in the tech sector, and the potential for higher costs.
These challenges aside, I’d buy Softcat for my portfolio of growth stocks.
