Two growth stocks that could soar once volatility subsides are Rightmove (LSE: RMV) and 4Imprint Group (LSE: FOUR).
Here’s why I’d be willing to buy some shares as soon as I have some available cash!
Rightmove
Rightmove is the largest online property portal in the UK, with an enviable market share. It’s like Auto Trader for properties! It makes money from fees it collects from estate agents listing properties for sale and rent.
The shares are down 7% over a 12-month period from 591p at this time last year, to current levels of 546p.
The recent turbulence has hurt the property market badly. Rising interest rates and inflation have made it harder for people to buy and sell properties. In fact, house builders have also been impacted with less completions and sales, as well as margins being stretched.
However, the recent murmurings that interest rates have peaked and could be on the way down could be good news for Rightmove, and the sector as a whole. Once activity picks up, the firm should benefit.
The obvious risk is continued volatility. As recent inflation figures unexpectedly rising showed we’re not out of the woods yet. However, I think some short-term pain will be offset by some potentially lucrative times ahead for the business and shareholders alike.
Rightmove shares offer a dividend yield of 1.5%, which could grow in line with the business. However, it’s worth noting that dividends are never guaranteed.
Overall, Rightmove’s management team seem to be confident in their long-term aspirations and direction of the business. They’ve recently announced a share buy back scheme. I believe this is a sign of confidence that their operations are solid, and that the firm should continue its upward trajectory once turbulence cools.
4Imprint Group
Direct marketing firm 4Imprint has already been on a great trajectory in recent years. The shares are up 23% over a 12-month period, from 4,364p at this time last year to current levels of 5,390p.
A recent pre-close update made for excellent reading as profit levels are set to rise by 35% compared to the previous year. Full results are due next month, which I’ll be keen to view.
Whenever I review 4Imprint shares, I often wonder if the gravy train will run out and it may have hit a ceiling, but it keeps defying my personal expectations. The business continues to generate great performance levels and growth.
I do have two concerns at present. First is 4Imprint’s valuation on a price-to-earnings ratio of 19. Is growth already priced in? Could some negative news or trading send the shares tumbling? The other side of the coin is that sometimes you have to pay a fair price for a good company.
My other concern is the fact that rising costs and volatility could hurt margin levels, which underpin returns and growth. Continued turbulence could impact performance.
On a bullish note, the shares offer a well covered dividend yield of over 6%. This is higher than the FTSE 100 average of 3.8%.
For me, the pros outweigh the cons and 4Imprint’s investment case looks pretty solid to me right now.
