Top
Image Alt

The Investing Box

  /  Editor's Pick   /  With £1,000, here are the best growth stocks to buy now

With £1,000, here are the best growth stocks to buy now

A pastel colored growing graph with rising rocket.

The Nasdaq has had an awful start to 2022, falling nearly 30% year to date. In the past 12 months, it has sunk 20%. This poor performance has been driven by inflationary pressures, which has recently reached its highest for 40 years. But although my growth stocks are reaching multi-year lows, which has caused significant pain in my portfolio, I am not tempted to sell. Instead, I feel that now is a great time to buy stocks on the cheap for their long-term future. Here are three I would buy right now. 

Established chipmaker

Nvidia  (NASDAQ: NVDA) has excelled in the past few years, rising 350% in the past five. However, due to macroeconomic concerns, the Nvidia share price has sunk 40% in the past six months and around 8% in the past year. There are equally some worrying signs for the firm. For instance, in Q2, the company expects a $500m reduction of revenues, due to the Russia invasion of Ukraine and Chinese lockdowns. But I see these as short-term issues. 

Indeed, the firm is still reporting excellent financials, with Q1 revenues up 46% year-on-year to $8.29bn. Further, with Q1 operating profit margins of over 40%, Nvidia has one of the largest margins among all growth stocks. This has also enabled the group to launch a share repurchase programme of $15bn until December 2023, which should boost metrics like earnings per share. Therefore, Nvidia shares are a no-brainer buy for me. 

More resilient growth stock 

It is rare to find growth stocks that are raising guidance in the current macroeconomic environment. However, Salesforce  (NYSE: CRM), a cloud-based software and consumer relationship management company, recently increased its adjusted profit forecasts for 2022 to $4.75 per share, up from previous forecasts of $4.63. This has been driven by expanding operating margins, highlighting that the firm has dealt with inflationary pressures excellently. 

There are still risks for the firm, however. For instance, some analysts have pointed to the potential for companies to cut costs to cope with inflation, and this could include cancelling subscriptions with Salesforce. However, with a price-to-earnings ratio of around 35, which is historically cheap for the group, I am still tempted to add more Salesforce shares to my portfolio. 

Global e-commerce giant 

Sea Ltd  (NYSE: SE) is the final growth stock I would buy on the dip. After sinking over 70% in the past year, this is the heaviest faller out of the three. With the group continuing to post very large losses – including a total adjusted EBITDA loss of $593.6m in 2021 – it is not hard to see why. However, this loss has been recorded due to the firm’s heavy investment into its e-commerce sector. 

This investment has led to soaring revenues. For example, in 2021, revenues for the group reached $10bn, which was a 127.5% increase year-on-year. This growth has also continued into 2022, with Q1 revenues up over 60% year-on-year. Although this signals slightly slower growth, it is still far higher than other growth stocks. After the recent dip, Sea Ltd also has a forward price-to-sales ratio of under 3, compared to over 30 at the start of 2021. This indicates that the e-commerce company has dipped too far. Therefore, I am adding more Sea Ltd shares to my portfolio. 

The post With £1,000, here are the best growth stocks to buy now appeared first on The Motley Fool UK.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

More reading

Stuart Blair owns shares in Nvidia, Salesforce, Inc and Sea Limited. The Motley Fool UK has recommended Salesforce, Inc. and Sea Limited. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.