Shares are having a great run at the moment. This year, the FTSE 100 is up about 8%. Meanwhile, the S&P 500 is up about 12%.
Here, I’m going to highlight three shares I’d buy right now. I think all three have considerable growth potential in the current environment.
A top UK tech stock
One UK stock I think looks attractive at the beginning of May is Gamma Communications (LSE: GAMA). It’s a leading provider of unified communication solutions.
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The reason I’m bullish on Gamma is that I expect the ‘hybrid’ working model – where people work from home a few days per week – to become far more common. Gamma should benefit from this trend. Its communication solutions, which enable employees to work remotely, are well-suited to organisations that have a flexible working setup.
Recent results for 2020, were very impressive. For the year, revenue was up 20%. Meanwhile, adjusted earnings per share were up 26%. Looking ahead, the company said it’s “positive about the outlook for the group in 2021 and beyond.”
There are risks to the investment case, of course. One is the threat of competition – this is a competitive industry. Overall however, I think this growth stock has a lot of appeal. The stock’s P/E ratio of 31 seems fair to me, given the growth potential.
A game-changing acquisition
Another stock I’d buy right now is Boohoo (LSE: BOO). The leading online fashion retailer now owns a whole portfolio of big brands. These include PrettyLittleThing, Debenhams, NastyGal, and Coast.
Boohoo has generated unbelievable growth over the last five years (revenue growth of nearly 800%) and I think the company’s recent acquisition of Debenhams is going to boost growth further. Debenhams is a well-known brand in the UK and its website gets approximately 300m hits per year. On the Debenhams website there’s now lots of Boohoo products (and other Boohoo brands) for sale.
This stock can be volatile at times. So it’s not suited to risk averse investors. I’m comfortable with the volatility though. With the stock trading on a forward-looking P/E of about 31, I see it as a ‘buy’.
A Warren Buffett-owned stock
Finally, I continue to like Mastercard (NYSE: MA), which is listed in the US. I named this stock as a top ‘reopening’ play back in March and, since then, it has performed well. I think this Warren Buffett-owned stock has the potential to keep rising though.
I like Mastercard for a number of reasons. Firstly, I think it should benefit as the global economy continues to reopen and travel picks up. Last week, the company said it’s started the year with “good momentum,” delivering positive net revenue growth in Q1. It also said it’s encouraged by the return of US spending levels to pre-pandemic trends.
Secondly, the long-term growth potential here is significant. Over the next decade, we’re going to see trillions of transactions shift from cash to credit cards and electronic payments. Mastercard looks well-placed to benefit from this trend.
This stock is not cheap. Currently, the forward-looking P/E ratio is about 48. This adds risk to the investment case. I’m comfortable with this valuation however, as the company is very profitable and has a lot of growth potential.
