The key to winning in the investment game isn’t so much ‘timing the market’, as ‘time in the market’. This phrase will be known already to most investors, but it can never be repeated enough! If you want to make money in the long-run, you just need to buy and hold good companies.
Sounds simple, right? It is, but of course finding the right companies and buying them at the right price is much harder in practice than it appears to be from the textbooks. In this article, we take you through 5 UK growth stocks that you could buy now and hold for the long-term.
This is because they look ‘future-proof’, in the sense that their business models are unlikely to be disrupted any time soon. In fact, these companies are much more likely to be disrupting, rather than being disrupted themselves.
5 UK Growth Stocks To Buy Right Now:
1. Funding Circle
The UK and London in particular is a global hub for fintech, but most companies remain in private hands. However, there are a few great options for investors looking to tap into the massive growth potential of this innovative sector.
Funding Circle is definitely one of the better-known fintech firms, and therefore provides a good place for us to start looking for investment opportunities here. Funding Circle operates a ground-breaking peer-to-peer lending platform that allows small businesses to source loans provided from private investors. This means SMEs get the funding they need to grow without having to pay large fees to bankers, and investors get a good return on the money they have leant out. Its main markets to date are the UK, US, Germany and the Netherlands, but plans to expand further afield are underway.
Crucially, although delivering strong revenue growth, Funding Circle haven’t made the leap into profitability yet, and their shares trade below the IPO price. This means that a long-term investor able and willing to risk a small portion of their capital could consider buying and holding Funding Circle stock for the long-run. If the company can keep growing and eventually reach profitability, the shares will be set for an enormous increase. There are good reasons to think Funding Circles business model is ready for the future, and that the company will continue to grow, but of course this is not guaranteed.
2. Augmentum Fintech
Another way to access the UK fintech scene is through Augmentum Fintech. This is the only UK-listed venture capital investor that specializes in fintech. The fund seeks out promising fintech startups in the UK and elsewhere and takes a controlling stake in order to steer them to further growth.
Currently the fund is valued at a little over £130 million and it has stakes in many of the most desirable fintech companies. Crucially, this includes those that remain in private hands, such as mortgage lender Habito, business bank Tide, and peer-to-peer lending firm Zopa. This means through Augmentum you can get some access to both public and private fintech success stories.
Classed as an investment trust in which investors can buy shares, Augmentum is one of the best ways for investors to gain exposure to the majority of fintech businesses that they can’t invest in directly. Augmentum look like a great way to gain some exposure without having to risk picking individual stocks in a high growth but highly volatile new sector.
3. Clipper Logistics
Clipper Logistics is a leading provider of value-added logistics solutions, e-fulfilment, and returns management services. In short, Clipper is one of a new breed of e-commerce focused logistics companies who have seen dramatic growth over the past few years. Needless to say this pre-existing dynamic was only accelerated by the pandemic, and right now Clipper Logistics look like a company with even more growth ahead of them in the near future.
More and more shoppers are turning to the online world for more and more of their purchases, and Clipper has to date attracted more than 60 corporate clients, including online retail giant ASOS. Clipper also lease warehouse space to more traditional retail heavy-weights like British American Tobacco.
The share price has of course appreciated a lot over the last 18 months, but Clipper still looks like a stock with massive growth potential that an investor could consider buying now and holding for the long term.
4. Sirius Real Estate
Sirius Real Estate hadn’t had much coverage in the business press until very recently. However, those who watch the real estate investment space closely had been aware for some time now that the stock was gaining a lot of momentum.
There are very few situations where real estate doesn’t prove to be a very solid investment, and right now the opportunities presented by the pandemic and the changes to daily behaviour are proving very profitable for real estate investors.
Sirius has recently completed its €400 million corporate bond issue, meaning the group has cash to spend on assets. Soon after this was announced, it followed that the group had purchased four German business parks and a parcel of land for just under €85 million. The properties are in Oberhausen, Frankfurt, Heiligenhaus and Öhringen and provide over 150,000 square meters of lettable space comprising a mix of warehouse, production, and office space.
As such, Sirius are betting on a gradual return to normality in the world of work, and expect the sites to generate steady cashflow over the medium-term horizon. It should be pointed out, however, that elsewhere in the business, Sirius is building in flexibility over whether the pandemic has changed the role of offices.
They have acquired several ‘non-traditional’ real estate assets that they hope will outperform expectations and help to diversify their business.
Motorpoint is a used-car sales company with 14 branches and a growing e-commerce division. The company has seen very healthy growth over the past few years, especially since the pandemic saw demand for cars soar. Motorpoint are ambiguously targeting a full doubling of their revenue as they expand their online capacity and invest heavily in online marketing. Whether or not they can make this leap, the company look very sturdy today, with definite growth prospects ahead.
Today, the personal car is a totally essential thing for many around the world. Whilst there was a brief time when ride-hailing or car sharing apps looked like they would drive down the popularity of the private car, these ideas now look very out dated. Companies like Motorpoint that keep a close eye on their costs whilst consistently managing to grow their revenues always look like good growth stocks.
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