If I had £5k to invest in UK shares for growth in 2022, I would buy five of my top growth stocks for the year ahead according to the market sectors or themes that I believe are experiencing the most substantial growth tailwinds.
I believe these sectors and themes are renewable energy, technology, and the economic recovery.
And with that in mind, here are my five growth shares for 2022.
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UK shares for growth
Two plays on the renewable energy and recovery themes I would buy are XP Power and Lamprell.
Lamprell designs and builds infrastructure for the energy industry. It has a small but growing business manufacturing assets for the renewable energy industry, such as the offshore wind segment.
Management is looking to expand this business over the next few years, and the company is bidding on many large manufacturing contracts with this aim in mind.
Meanwhile, XP Power manufactures power supply units. These units transform power from AC to DC currents and vice versa. The company is reporting growing demand for its products from the green energy sector as demand for power supply facilities expand.
Both of these corporations look attractive as growth investments in 2022. However, both companies are exposed to significant risks. Neither has a commanding share of their respective markets, so both are exposed to competition. They could lose market share to larger producers if they fail to keep up with the rest of the market.
Tech stocks to buy
In the technology sector, I would buy the growth stocks Darktrace and Team17. I think these businesses provide exposure to two fast-growing tech themes, cybersecurity and gaming.
Darktrace is one of the world’s premier cybersecurity companies, using artificial intelligence to attack and neutralise threats. As the cybersecurity industry expands, I expect the group to capture a significant market share thanks to its unique technology.
Team17 has a portfolio of unique gaming products, which enables it to earn a steady recurring revenue stream. It is also developing a pipeline of new products, which should contribute to significant growth over the next few years.
These companies are also exposed to significant competitive headwinds. They have to compete against the large US tech giants, which have more resources and bigger budgets. Competing against these firms is the biggest challenge facing Darktrace and Team17.
Economic recovery
The final company I am going to highlight in this article is H&T Group. This group provides a range of simple financial products and pawnbroking.
I think the demand for its services will increase as the economy begins to recover after the pandemic. Recovering consumer confidence could lead to higher demand for loans and more purchases at its retail stores.
With a dividend yield of 3% at the time of writing, the business also offers an attractive level of income, unlike the other companies outlined in this article.
Risks the business may face going forward include higher wage costs and potential regulations on its financial products.
