I’m searching for the best growth shares to buy for my Stocks and Shares ISA in September. Here are two I think could be too cheap for investors to miss.
Digital dynamos
There’s a vast collection of cybersecurity companies investors can choose from on the London Stock Exchange. And a quick look at broker forecasts showcases how much potential these growth stocks have.
Take Kape Technologies (LSE: KAPE), for instance. City analysts think that earnings here will jump 57% year on year in 2022. This is particularly impressive given the rising prospect of a global recession.
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Kape builds antivirus software that currently protects over 7m global users from malicious attacks. This is a small number compared to industry heavyweights like Microsoft and FTSE 100-quoted Avast. But sales are growing at an astonishing speed.
Revenues roared to $301.6m in the first half of 2022, up 216% year on year (or 19% on a pro-forma basis). Encouragingly almost nine-tenths of sales were recurring in nature, giving the company excellent earnings visibility.
Watch the unicorns
A report by Atlas VPN illustrates how rapidly the cybersecurity industry is growing. It says that the number of ‘unicorns’ — the name given to private new businesses valued at $1bn or above — is growing “at an unprecedented rate.” This is clearly a good sign for the entire industry.
Despite its impressive sales momentum Kape Technologies shares trade exceptionally cheaply. Today the tech business trades on a forward price-to-earnings growth (PEG) ratio of 0.2. Any reading below 1 suggests that a stock could be undervalued.
Remember, though, that cybersecurity specialists like this operate in an unforgiving industry. A high-profile failure of their systems could spell catastrophe for future earnings.
Another bargain growth share
Clarkson (LSE: CKN) is one of the world’s largest providers of shipbroking services. So in theory it is in danger of seeing profits fall as the global economy cools and seaborne freight volumes slow.
But despite the deteriorating macroeconomic outlook City analysts continue upgrading their earnings forecasts for the business. They now think earnings will rise 25% year on year in 2022 amid predictions of further solid revenue growth.
There simply isn’t enough shipping capacity to go around. And so shipping rates continue to rise, boosting profits at businesses like Clarkson.
The Xeneta Shipping Index, for example, shows that long-term freight rates on container ships are still rising strongly. These were up 4.1% month on month in August, or 121.2% on an annual basis.
Inadequate shipbuilding levels in recent years have left a huge shortage of available vessels. And with a recession looming new ship orders look set to slip again, worsening the supply/demand imbalance.
It’s why Clarkson — which enjoyed revenue growth of 40% in the first half — has commented that “the outlook for the business remains strong.”
I think recent share price weakness here provides an excellent dip buying opportunity. Today Clarkson shares trade on a PEG ratio of just 0.6. Like Kape Technologies, I think this is one of the best growth stocks out there for value investors.
