I’m searching for the best growth stocks to add to my Stocks and Shares ISA in the coming weeks. Here are two I’ll be looking to buy if I have spare cash to invest.
Animalcare Group
The pharmaceuticals market for animals is growing rapidly. The amount people shell out to keep their companion creatures healthy is on a long-term uptrend. Spending here has also proved to be remarkably resistant during this tough economic period.
At the same time, demand for drugs for livestock is increasing strongly. And as an expanding global population boosts demand for food animals, it’s on course for further stratospheric growth.
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Analysts at Precedence Research expect the global veterinary medicine market to be worth $93.7bn by 2032. That’s more than double what the sector was valued at last year.
This all explains why City analysts expect Animalcare Group’s (LSE:ANCR) bottom line to keep steadily expanding. Annual earnings are tipped to increase 5% in 2023 and 12% next year.
Following the 2017 acquisition of Ecuphar the business has a presence in seven European markets. It also has a growing network of distribution partners to sell products across the continent. And the firm has a €10m borrowing facility it can use specifically for acquisitions to boost profit growth.
Rising scrutiny from lawmakers in some markets poses a threat to Animalcare’s growth potential. Indeed, sales fell 3.3% in 2022 due in part to EU laws implemented in Spain to limit antibiotic use.
Calls are also rising from investors for companies to use fewer antibiotic drugs with livestock. Legal & General, for instance, says it will push McDonald’s to write a report on the public health impact of these drugs at the burger firm’s AGM this week.
That said, I still believe investing in Animalcare could be highly lucrative as demand for other drugs balloons.
dotDigital Group
Tech businesses with expertise in artificial intelligence (AI) could also record explosive profits growth over the next decade. One such UK share on my radar today is dotDigital Group (LSE:DOTD).
Fresh spending from Qatar’s sovereign wealth fund underlines the huge investment potential of AI stocks. It was announced on 23 May that the Middle Eastern fund has ploughed a whopping $250m into London-based Builder.ai, which uses AI to build software.
dotDigital could also prove a winner in the years ahead. Its technologies allow e-tailers to automate their marketing operations, provide a tailored experience for online consumers, and stay connected with their customers though email campaigns.
Okay, analysts expect the company to experience a rare earnings fall (of 4%) in the financial year to June. But the business is expected to bounce back immediately. Bottom-line rises of 5% and 9% are currently anticipated for fiscal 2024 and 2025, respectively.
Tough economic conditions could put earnings forecasts for this year and next in jeopardy. Still, as a long-term investor I’d buy dotDigital shares for the robust profits growth I’m expecting further out.
