2 FTSE growth stocks to buy before the next bull run!

Share prices are pretty depressed right now, but I’m looking at these two FTSE stocks to generate strong returns for me in the years ahead.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

I’ve been hunting for high-potential growth stocks on the FTSE as valuations sink this year.

Economic forecasts aren’t great right now, and the current environment isn’t particularly conducive to growth, but I’m confident we’ll see a bull market when sentiment starts to change.

Don’t forget, after the 2008 financial crisis, UK shares exploded upward. The bull run generated considerable wealth.

Should you invest £1,000 in Card Factory Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Card Factory Plc made the list?

See the 6 stocks

So, here are two UK stocks that I think have huge potential.

Darktrace

Darktrace (LSE:DARK) is a British cyber-security firm which uses AI to prevent attacks in real time.

The company’s most recent business updates have been positive. In April, Darktrace increased its annual revenue guidance after adding 359 net new customers in the third quarter. It said it had added $105.3m annual recurring revenue (ARR) in the nine months until the end of March.

This was followed by a positive broker appraisal.

Jefferies, referring to the group’s “positive” third-quarter trading statement, set a 730p target for the stock, more than double the current share price.

The security environment is also conducive to Darktrace’s growth. US President Joe Biden encouraged firms to enhance their protection earlier this year amid increasing geopolitical competition.

But Darktrace’s name has been somewhat muddied in 2022. In May it was announced that a Darktrace executive had been named in a judgement concerning malpractice in the sale of Autonomy to Hewlett Packard in 2011.

A judge contended that Autonomy’s management had pulled accounting “levers” to misrepresent the Cambridge-based business’s performance ahead of its sale.

Yet aside from that, I think this is a cyber-security firm with considerable potential. The stock has a price-to-sales ratio of eight, which is considerably less than its competitors, including CrowdStrike at 24.5.

I bought Darktrace shares in May, and would buy more at the current price.

Ocado

Ocado (LSE:OCDO) shares now trade below their pre-pandemic price. The grocery delivery and technology firm was one of the few winners during the pandemic. Its stock soared when lockdowns started. But the shares have since slumped.

Regardless, I see plenty of value in Ocado. The company uses advanced robotics in its warehouses to enhance efficiency, and this could prove vital amid the current inflationary pressures we’re seeing.

The firm is also licensing its robotics infrastructure to other grocers. As of November 2021, Ocado had 10 licensed sites generating a total of £777m in sales. That’s around 31% of its revenue. And it’s continuing to invest in its robotics division with the $10m buyout of US robotics start-up Myrmex.

Growth, according to some metrics, has continued beyond the pandemic. In March, the company said it had 835,000 active customers, far above pre-pandemic levels.

However, Ocado reported a 6.4% decline in sales over the last quarter, with overall online sales down 12% in June as shoppers cut their spending.

However, my positivity is driven by long-term trends to push grocery shopping online, and the business’s underlying data. The robotics arm generates an EBITDA margin of 10%, while its retail arm should grow in the long term.

I haven’t bought Ocado shares yet, but I’d buy and hold them for at least five years.


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Fox owns shares in Darktrace. The Motley Fool UK has recommended CrowdStrike Holdings, Inc. and Ocado Group. 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.

More on Investing Articles

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

This FTSE 250 trust is easily beating the global index in 2025. Time to buy?

One global FTSE 250 investment trust has been turning things round recently, with a handy bit of outperformance. Ben McPoland…

Read more »

Bournemouth at night with a fireworks display from the pier
Investing Articles

Is the fizz about to go from the Coca-Cola HBC share price?

The world’s most popular drink’s hitting the headlines again. Our writer considers whether there are any implications for the Coca-Cola…

Read more »

Portrait of a boy with the map of the world painted on his face.
Investing Articles

3 top FTSE 250 investment trusts to consider buying today 

This trio of high-quality trusts from the FTSE 250 index would give a Stocks and Shares ISA portfolio a truly…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Another strong set of results from this FTSE 100 telecoms company. Time to buy?

The FTSE 100’s Airtel Africa released its first-quarter earnings yesterday (24 July). Our writer’s been taking a closer look at…

Read more »

A quiet morning and an empty Victoria Street in Edinburgh's historic Old Town.
Investing Articles

The Rightmove share price is too hot… a pullback could be coming

The Rightmove share price has pushed above the consensus share price target. And while analysts are often wrong, this could…

Read more »

Branch of NatWest bank
Investing Articles

With the bank’s income, margin and earnings higher, the NatWest share price continues where it left off!

Post-pandemic the NatWest share price has been the third-best performer on the FTSE 100. Our writer looks at the bank’s…

Read more »

piggy bank, searching with binoculars
Growth Shares

Up 13% in a day, this FTSE 250 stock may be primed to rocket even higher

Jon Smith reviews a FTSE 250 company that's suddenly on everyone's minds, and outlines why the party's just getting started.

Read more »

Engineer Project Manager Talks With Scientist working on Computer
Investing Articles

After falling 16% in a day, this stock’s on my list of shares to buy in August

Despite the FTSE 100 and the S&P 500 hitting record highs, Stephen Wright’s list of shares to buy in August…

Read more »