5 UK Growth Stocks That Could Make You Rich
These uk e-commerce companies operate in a fast-expanding market could make Investors richer
This, in most cases, leads one to established companies that may not have much room to grow in terms of stock appreciation.
While investing in such stocks is suitable for safety, one needs to look at entire industries and go for those disrupting the economy if the goal is to get rich. Companies operating in high-growth disruptive industries more often than not tend to outperform the market.
For context, anyone who invested in tech giants like Google and Amazon in the 1990s is already rich. That’s because the internet was just picking up, and these companies simply grew with it.
At the moment, the e-commerce space is in a high growth phase. There are many players in this market that though small, are disrupting traditional industries in a big way.
With that in mind, Deliveroo (ROO), Boohoo (BOO), Ocado (OCDO), Ds Smith (SMDS), and Tritax (BBOX) are growth stocks that have the potential to make investors rich in the long term. Here’s why.
5 UK Growth Stocks That Could Make You Rich
Deliveroo operates in the food delivery market, and this is a high growth market at the moment. With working from home now the in-thing, and most offices moving to suburban areas, food delivery is only bound to get bigger.
What makes Deliveroo an exciting stock to watch is that it is one of the most recognized companies in this market. This means as the food delivery market expands, so will its fortunes.
Market data also indicates that Deliveroo customer numbers are on the rise, further validating its prospects for growth.
In the first 6-months of 2021, the number of orders on the app more than doubled. Revenues also increased by 82% in 6-months to a high of GBP 922.5 million.
The company’s prospects are so good that it is even attracting investments from its competitors.
Earlier this week, Delivery Hero, a Berlin-based delivery app, announced that it had acquired a 5% stake in Deliveroo.
Besides operating in a high-growth market, Deliveroo’s technical indicators point to a perfect entry for a long-term value play.
The stock rose sharply in April then tanked again within the same month. It has been flat since then.
This may not look very attractive to many investors, especially now that Deliveroo’s books do not look great.
However, when it comes to getting rich in the financial markets, it is all about taking calculated risks.
In this case, the risk-reward level is attractive. The price is low, revenues are growing, and the broader market that it operates in is on an exponential growth path.
In a few years, Deliveroo’s revenues could be multiple times where they are today.
Deliveroo is a perfect stock that could turn out to be the next Amazon or Google in terms of value appreciation.
It is not just the food market that online startups are disrupting. The fashion industry, too, is a target.
Online fashion retailers are eating up the market of more established market players. One company that has carved a niche in this market is Boohoo.
Based on its most recent data, the company’s revenues are on a growth trajectory. In May, the company reported that its revenues were up by 32% compared to a similar period earlier.
The best thing about this company is that it has a presence in multiple key markets and is recording growth in all of them.
In the last two years, the company’s UK sales rose by 95%. In the U.S, Boohoo’s sales are up by over 157% over the previous two years.
Boohoo’s books look pretty good, too, and paint a picture of stability. It has operating cash flows of GBP 162.9 million and leveraged cash flows of GBP 3.58 million.
This means it has enough liquidity to handle its day-to-day operations without having to result in high-cost borrowing.
Boohoo also has more than enough resources to cover all its short-term liabilities. This is evident in its current ratio of 1.69.
Most importantly, the company is efficiently utilizing its assets. This is evident in its return on assets that stands at 11.53% and a return on equity of 23.34%.
It goes to show that as the company gets richer due to its growing revenues, it is likely to extract even higher value from its assets.
Despite these improving fundamentals and in a high-growth market, Boohoo’s stock price is currently at historic lows.
The stock has been trending lower for months now. This means an investor who gets in now can make a lot of money as the price rises over time.
While buying now when the stock is trending lower may sound counterintuitive, it is in such moments that money is made.
One of the wealthiest people of all time, Baron Rothschild, once said that the time to buy is when there is blood on the streets. In the case of Boohoo, the stock has been bleeding for months, yet its fundamentals are getting better.
Once it starts rising and FOMO kicks in, this stock has the potential to make investors who get in now wealthy. It has all the hallmarks of a value stock.
Ocado operates in the fast-growing online grocery retail market. Since it is one of the more dominant players in this market, it goes without saying that it stands to gain in value as this market expands.
Besides operating in a fast-growing market, Ocado’s books paint a picture of a stable company.
For instance, the company’s debt is within manageable levels and has been manageable for a while now.
While its total debt has increased, so has its total net cash assets. That’s an indicator that debt is being utilized properly to grow the company’s balance sheet.
The best thing about this stock is that it has been on a downtrend for a while now, and very temporary factors occasioned the downtrend.
4. Ds Smith
Ds Smith is right in the middle of the fast-growing e-commerce economy. The company offers packaging services in the UK, and its services are in demand by companies selling online.
The company’s books are pretty good too and point to a stable company with solid growth prospects.
One of the positive indicators to Ds Smith is its cash flow numbers. The company’s operating cash flows stand at GBP 751 million, while its leveraged free cash flows stand at GBP 273.56 million.
This means it has the resources to keep its operations going without interruptions.
While the Ds Smith’s current ratio is not that good, it is likely to improve due to the growing revenues.
Back in June, CEO Miles Robert stated that the company was shifting to fibre-based packaging to grow its revenues. He also stated that he expected the growing e-commerce space to drive revenues going into the future.
The charts paint the picture of a growth company too. It has been trading in a bullish channel for months and recently bounced off the 50-day moving average support.
With the Ds Smith positioning itself for growth in the e-commerce space, this is a perfect entry point for a long-term position.
Tritax Big Box REIT wraps up the top 5 UK growth stocks that can make investors rich in the long run. Tritax runs warehouses, and this is a business that is picking up with the growth of e-commerce.
Essentially, the company is in a growth market, and that is good for its long-term prospects.
However, the most bullish signal for Tritax is that those who have insider information about it are loading up on the stock.
On 11th August, one of the company’s partners, James Dunlop, announced that it had acquired 5.1% more of BBOX shares.
This is not the first time that an insider is buying BBOX. Over the last 12-months, Mark Glen, a company insider, acquired GBP 272,000 worth of this stock.
Insider purchases usually point to good prospects ahead for a company and are an excellent reason to buy, especially for a high potential stock like Tritax.
This stock’s price action also points to rising bullish momentum. It has been trading in a bullish channel for months, above the 50-day moving average.
Buying volumes have shot up in August, indicating that investors are taking note of Tritax strong fundamentals. However, since it is yet to make any major price moves, current prices present a reasonable entry price for long-term investors looking to build wealth.
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