Over the course of the past six months, Rolls-Royce shares have been the talk of the town. The stock’s rallied 146% over the past year, making it the top performing FTSE 100 member by some stretch. Although the ship might have sailed here, there are some other growth stocks I think could jump in a similar way over the coming year.
Looking towards AI
When it comes to growth areas, I think artificial intelligence (AI) is a key theme. To this end, I like Alphawave IP Group (LSE:AWE). This UK stock is already up 74% over the past year. However, the stocks only has a market-cap of £1.37bn, so this isn’t a huge FTSE 100 stock. This means it could realistically double in value without it being ridiculously large.
The scope for growth comes from the demand for the designs and software solutions it engineers for chip manufacturers. Given that chips are the key to almost all AI-related software, it stands to gain in a big way from the surge in interest.
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The business is doing well. Revenue for 2022 stood at $185.4m, with the latest outlook for 2023 ranging $340m-$360m. A similar jump is expected in profitability. This would reflect the rise in the share price.
Logically, if 2024 can produce another increase of around 100% in revenue and profit, the share price could increase the same. Given the demand for the chips right now, I don’t think this is unrealistic.
Of course, a risk is that Alphawave can’t keep up with demand. It isn’t anywhere near the size of some clients, which could pose a problem.
Still down in the dumps
Another one I’m watching closely is Aston Martin (LSE:AML). I know this stock’s been a falling knife in the past few years, and it continues to move lower. Yet when looking for growth shares that could double over the next year, it does have potential.
The recent full-year results were very positive, in my view. Revenue jumped 18% from 2022, with gross profit up 42%. Part of what’s helping the turnaround is the increase in the average selling price. For example, for special edition cars, the selling price was 15% higher than 2022. If it can continue on this push while maintaining great production cars, I think the business can flip to a net profit in 2024.
My main risk is that the current share price simply doesn’t reflect that potential. Even though the business halved the loss after tax from last year, there doesn’t seem to be much optimism for company. This could prevent any jump in the stock.
Yet this reminds me exactly of Rolls-Royce shares before they started soaring. Therefore, I think that as soon as the stock starts to rally, a lot of people will jump on board, pushing the stock higher and higher. I don’t think a 100% jump’s unrealistic. If the stock just reached back to its 52-week highs, it would have risen 155%.
I’m considering investing in both stocks for potentially large gains.
