Every month, we ask our freelance writers to share their top ideas for growth stocks to buy with investors — here’s what they said for November!
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Fresnillo
What it does: Fresnillo is the world’s largest primary silver producer and Mexico’s largest gold producer.
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By Andrew Mackie. Fresnillo’s (LSE: FRES) stock, like virtually every other precious metal miner out there, has taken a beating in 2023. It’s no exaggeration to say that it’s been both brutal and frustrating to be an investor in the space.
This fact stands in stark contrast to the price of the yellow metal, which continues to hover around its all-time high. Primarily, this is because global central banks have been accumulating gold recently.
I am of the view that we are on the cusp of a new gold cycle. I could express that high-conviction thesis solely through buying a precious metals ETF. However, I think I can achieve much better returns if I invest in the metal in the ground, through buying shares in gold mining companies.
I believe that Fresnillo shares represent one of the best opportunities out there at the moment. Not only does it have a number of cash-generating mines, but it also has a healthy pipeline of exploration projects. Indeed, one such project went live earlier this year. This new mine will add significant new production capacity.
One notable risk is that its shares can be extremely volatile. This year they have lagged due to a number of operational reasons as well as rising costs. As they trade at multi-year lows and with sentiment being so bearish, I recently bought more of the growth stock for my portfolio.
Andrew Mackie owns shares in Fresnillo.
Games Workshop
What it does: Games Workshop designs and manufactures fantasy miniatures and related games. It also licenses its designs to third parties.
By Harshil Patel. The Games Workshop (LSE:GAW) share price is up by over 50% over the past year. But currently, it’s hovering around 16% below the highs of the year.
This looks like an opportunity for me to snap up some more shares in this growing business.
I’d describe Games Workshop as a high-quality growth stock. It offers a return on capital employed of a whopping 60%, and a chunky 30% profit margin.
Combined with ample free cash flow and a rock-solid balance sheet, I’d describe it as one of the finest shares in the FTSE 250.
Business momentum is encouraging. Its most recent trading update reported quarterly sales and profits that were ahead of the board’s expectations, driven by healthy growth across all business areas.
The company relies on interest in its Warhammer franchise. For continued growth, it may need to ensure player interest doesn’t wane.
With a price to earnings ratio of 22 times, it’s not the cheapest I’ve seen it, nor the most expensive it has been.
Harshil Patel owns shares in Games Workshop.
Persimmon
What it does: Recently relegated to the FTSE 250, Persimmon has been building new houses in the UK since 1972.
By James Beard. With the base rate at 2008 levels and inflation eroding incomes, the UK construction industry is currently on its knees.
Between 2018 and 2022, Persimmon (LSE:PSN) sold an average of 15,060 homes a year. In 2023, it’s expecting 9,000 completions. Consequently, it’s slashed its dividend from 235p to 60p. Not surprisingly the company’s share price is down 70% from its all-time high of February 2020.
I think this represents a buying opportunity for this growth stock.
Interest rates are likely to fall in 2024 and the economy is expected to grow again. Confidence should then return and the demand for houses increase once more.
But there’s no guarantee that the housing market will recover. And onerous planning restrictions are often a barrier to new developments. However, we’ve come through worse downturns before and building more homes is top of the political agenda.
Also, Persimmon could recover quicker than its rivals as its houses are cheaper.
James Beard owns shares in Persimmon.
