I think it’s a great time to think about potential growth stocks that could do well once volatility subsides. Now could be a good time to snap some up, in my view.
Two picks I’d be willing to buy when I next have some spare cash are Rightmove (LSE: RMV) and Ashtead (LSE: AHT).
Here’s why!
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Rightmove
The property market has been in a malaise since economic turbulence began. Inflationary pressures and higher interest rates have caused this. The UK’s largest online property portals shares have fluctuated up and down. However, over a 12-month period, they’re down less than 1%. At this time last year, they were trading for 570p, and they currently trade for 566p.
The natural risk for Rightmove is continued volatility. If interest and mortgage rates remain higher, the buying and selling of properties could remain stagnant, like in recent months. If this continues for a while, Rightmove’s performance could be dented, hurting the shares and potential investor returns.
However, I’d expect interest rates to eventually come down. This could have a huge positive knock-on effect for the property market, and Rightmove. Its wide profile and brand power are too good to ignore, in my view. House builders could ramp up production once more. In turn, selling properties, using platforms like Rightmove, which collects fees for the pleasure, could help the business soar.
At present, Rightmove shares offer a dividend yield of 1.6%. Although dividends aren’t guaranteed, I can see this rate of return growing in line with the business. Plus, the business recently announced a share buyback scheme. I see this as a sign of confidence in the firm’s long-term plan and future outlook.
Ashtead
Construction equipment firm Ashtead could be a great candidate to benefit from turbulence dissipating.
The shares have dropped 10% over a 12-month period, from 5,476p at this time last year to current levels of 5,166p.
Ashtead’s dominant market position in North America is where its biggest risk, and potentially exciting growth, comes from. On the bearish front, the US economy has stalled in recent months, like many others, therefore infrastructure spending and construction has slowed. If this continues moving forward, performance and returns could be hurt.
However, a recent infrastructure bill passed by the government worth around $1trn could provide Ashtead with lucrative contracts and business in the future. Again, I should mention this could kick when the economy is in a better place. This could be a long way down the line yet.
Based on its presence, profile, and historical track record, the fact that the shares trade on a price-to-earnings ratio of just 16 is attractive. I’m comfortable paying a fair price for a good company. Plus, a dividend yield of 1.4% could grow in the future too.
To conclude, both stocks, Rightmove and Ashtead, could struggle in the shorter term. However, I’m more interested in the longer term. I’d buy them now, and hold on to them to provide returns and growth later down the line.
