Every month, we ask our freelance writers to share their top ideas for growth stocks to buy with investors — here’s what they said for December!
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4imprint Group
What it does: 4imprint Group is a direct marketer of promotional products with operations in North America, the UK and Ireland.
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By Ben McPoland. I currently like the look of 4imprint Group (LSE: FOUR). The FTSE 250 stock fell over 10% in November after the promotional merchandise firm noted a bit of softening demand.
That was hardly a bombshell to me, though. Businesses are cutting spending left, right and centre. So I’d imagine logo-embossed gift bags, stationary and T-shirts (the sort of stuff 4imprint sells) could well be sacrificed. There’s a risk the slowdown could continue for a bit longer.
That said, the firm still expects to pull in over $1.3bn in annual revenue, with a record pre-tax profit of at least $130m. That’s higher than its previous $125m guidance.
Another positive is the company’s strong financial position. It had a cash balance of $95m at the end of October and management remains bullish: “Our experience is that a less buoyant economic outlook represents a market share opportunity for 4imprint as our financial strength allows us to keep investing in the business and to take full advantage of a market recovery.”
Meanwhile, the shares are trading at 16 times earnings. They’re on my early 2024 buy list.
Ben McPoland does not own shares of 4imprint Group.
Burberry
What it does: Burberry is a global manufacturer, retailer and wholesaler of luxury goods.
By Paul Summers. Shares in FTSE 100-listed Burberry (LSE: BRBY) recently plunged on news of slowing sales as the cost-of-living crisis continues to impact discretionary spending.
Personally, I see this as an opportunity to buy in before the stock – down 30% in 2023, as I type – becomes fashionable again.
To me, there’s nothing to suggest the brand is any less coveted. Indeed, rising middle classes in regions like Asia should continue to act as a huge tailwind going forward.
On a more fundamental level, the company also consistently generates better-than-average margins and returns on the money it invests.
Yes, inflation could still take a while to return to more desirable levels. But unless one believes that this tricky economic period has removed all desire to show status, I reckon Burberry shares are surely primed for a significant bounce eventually.
Paul Summers has no position in Burberry.
FRP Advisory Group
What it does: FRP Advisory Group provides troubled businesses with help with issues such as restructuring, accounting and insolvency.
By Royston Wild. Investing in classic counter-cyclical stocks could be a good idea ahead of what looks set to be a tough 2024. Support services business FRP Advisory Group (LSE:FRP) is one company that analysts expect to thrive even as the UK economy toils.
British businesses are being squeezed by higher borrowing costs and weak consumer demand. And as a result, corporate failures are shooting through the roof. The number of insolvencies in England and Wales jumped 10% year on year to 6,208 during quarter three, according to the Insolvency Service. This was also a 14-year high.
FRP is an expert in restructuring and insolvency, corporate finance, forensic accounting and provides advice on debt, pensions, and tax. Its skills are in high demand during downturns like this and should remain so: revenues rose 19% during the six months to October, to £58.7m.
The AIM company is ramping up its headcount to meet demand for its services, too. It had 622 people on its books as of October, up 16% year on year. I’m expecting it to perform strongly despite industry competition.
Royston Wild does not own shares in FRP Advisory Group.
Rightmove
What it does: Rightmove operates a property portal that allows users to search for properties to buy or rent.
By Edward Sheldon, CFA. Rightmove (LSE: RMV) shares have come down in price lately and I think they look attractive at current levels.
This is a high-quality company with a strong brand, a high market share, an excellent growth track record, and a solid balance sheet.
And it’s performing well right now. Recently, the company advised that it expects revenue growth of 8-10% for 2023. There are not many businesses in the FTSE 100 index generating that level of top-line growth at the moment.
One risk here is that in the future, Rightmove could see more competition from OnTheMarket, which was recently bought by a large US company.
I like the risk/reward skew at current levels, however, and I’ve been buying the shares for my portfolio lately.
And I’m not the only one who has been buying. Recently, portfolio manager Nick Train added Rightmove to his UK Equity fund.
Train doesn’t buy new stocks very often so I think his investment here is notable.
Edward Sheldon owns shares in Rightmove
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage Investment Trust invests in growth stocks from public and private markets around the world.
By Charlie Carman. It’s been a difficult two years for Scottish Mortgage Investment Trust (LSE:SMT).
Baillie Gifford’s flagship growth-oriented fund has suffered amid high interest rates across the developed world, with the share price shedding over half its value since November 2021.
Faith in the management team has been tested following the departure of star stock-picker James Anderson last year. This is perhaps reflected in the trust’s 14% discount to its net asset value.
However, one major factor that could boost Scottish Mortgage’s performance is the trust’s unlisted equity exposure, which currently accounts for around 30% of the portfolio.
Rumours of potential IPOs in 2024 for Northvolt and SpaceX’s Starlink business are circulating. These companies both feature in the trust’s top ten holdings.
In that context, I think there’s a good chance the fund’s private equity positions could spur a recovery in the Scottish Mortgage share price next year.
Charlie Carman owns shares in Scottish Mortgage Investment Trust.
