I like the idea of getting exposure through my share portfolio to some of the possible business champions of tomorrow’s world. Some growth shares have seen their prices fall sharply in the past year. So I think that right now I might be able to pick up a few bargains. I am considering a couple of growth shares to buy now for my portfolio I think offer me an attractive mixture of risk and reward.
When I think of growth industries, I might think of silicon chips, digital apps or electric vehicles.
But what about chicken sandwiches? It might not be an obviously dynamic area, but meat products specialist Cranswick (LSE: CWK) has actually cooked up a very impressive growth recipe. Its revenues have risen at a compound annual rate of 10% over the past five years, with adjusted profit before tax showing 12.6% compound annual growth in the period.
That has helped the company reward shareholders. The Cranswick dividend jumped by an average 11.4% per year over the period, on a compound basis. Even better, the firm has now increased its dividend annually for over 30 years without a break.
Yet the Cranswick share price today is 20% below where it stood a year ago. I think it now looks like good value for my portfolio, given the firm’s growth potential. It trades on a price-to-earnings ratio beneath 15.
There are risks ahead, of course. Cost inflation and wage increases could eat into profits. Tightening consumer spending might lead some shoppers to shun pricier snacks, hurting revenues. But I see Cranswick as a well-run business with a proven ability to grow. That is why I count it among growth shares to buy now for my portfolio.
With interim results due tomorrow at digital ad agency network S4 Capital (LSE: SFOR), shareholders including myself will be looking for better news than we have had so far in 2022. The year’s list of woes have ranged from delayed results to reduced expectations of profitability.
Those disappointments help explain why the shares have lost half their value this year. They are 63% cheaper now than they were a year ago.
But is that share price tumble really merited? Although I see staff costs threatening profitability as a risk, the growth story at S4 remains exceptional. The company has said it expects to double revenues and gross profits within three years. Acquisitions could add further growth on top of that.
The share price has been hammered, but I feel that has obscured the strong long-term prospects the company enjoys. Tomorrow’s results will be a useful point to see whether it has continued to make good progress. I recently increased my position ahead of the results.
Growth shares to buy
From meat processing to digital marketing, these two companies sound like they are very far apart.
But both have business models I think can generate increased sales in years to come. Their company valuations are both discounted from where they stood a year ago. I see them both as growth shares to buy now for my portfolio.
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C Ruane has positions in S4 Capital plc. The Motley Fool UK has no position in any of the shares mentioned. 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.