Summary: Trading growth stocks in the UK market requires candidate companies with significant potential and a stable climbing performance. As investors expect a financial return for their patience and look for opportunities with positive indicators, we present you with the five best UK growth shares to buy/sell right now using the online CFD trading platform Plus500.
Recommended Multi-asset Broker for Online CFD Trading
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Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
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Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
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Low cost investing - No commissions and tight spreads.
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Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
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Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
What are growth shares?
About
Both large- and small-cap companies can be growth stocks, with the usual suspects coming from the tech sector, emerging market leaders, and otherwise expanding industries.
What separates growth shares from value shares boils down to parameters. While value shares rely on the current price and intrinsic value, growth shares derive their worth from revenue and sales growth.
Why invest in growth shares?
Traders with a stake in growth shares aim to profit by selling the shares after the growth stock’s value has increased. As expanding companies tend to reinvest their earnings into their business to reach new markets or deliver new products or services, not much remains for dividend payouts.
Therefore, growth investors aim to maximize their gains by capital appreciation, which is essentially the price difference between their initial investment and the returns they gain after concluding the trade.
5 Best UK growth shares to buy now
We present to you the best five UK growth shares to buy in 2023, according to their revenue and sales growth, historical performance, market capitalization, and future potential:
- IHG Hotels & Resorts (LSE: IHG);
- HSBC Holdings (LSE: HSBA);
- Sage (LSE: SGE);
- Standard Chartered (LSE: STAN);
- 3i Group (LSE: III).
1. IHG Hotels & Resorts
About
Based in Windsor, England, the origins of IHG Hotels & Resorts trace back to 1777. Having undergone several transformations, IHG is one of the world’s largest hotel companies today. Ranging from luxury hotels like Crowne Plaza to mid-range options such as Holiday Inn, the company operates assets that cover various target customer audiences and preferences.
Having been struck hard by the global pandemic with the rest of the hospitality sector, IHG Hotels & Resorts has experienced continuous recovery and estimated a growth above pre-pandemic levels by 2024. The numbers behind revenues and sales confirm this trend, promising future potential.
This UK growth stock is also a constituent of the FTSE 100 index.
IHG stock price today
2. HSBC Holdings
About
Headquartered in London, HSBC Holdings is a leading presence in the global financial sector, providing services to more than 39 million customers across 62 countries. It is Europe’s largest bank by total assets and boasts an annual revenue of more than 50 trillion US dollars as of December 2023.
HSBC offers various financial services, including retail, commercial, and investment banking. Its international presence and global reach make it a vital link in international trade and finance.
The company has a dual primary listing on LSE and SEHK and is a component of both the FTSE 100 and Hang Seng indices. The global trend of increased interest rates in 2023 has accelerated the conglomerate’s growth in sales and revenue, making HSBC one of the best UK growth shares to buy now.
HSBA stock price today
3. Sage
About
Established in 1981 and headquartered in Newcastle upon Tyne, Sage provides small and medium businesses with accounting, payroll, and enterprise resource planning software. These software products make Sage a crucial small business supplier of services contributing to financial operations, accounting automation, payroll management, and data analytics.
With a global presence and millions of active customers in 23 countries, the company has shown an ability to adapt to digital and cloud trends and a financial potential to continue growing into the near future. Sage is also a constituent of the FTSE 100 index, contributing to its reputation as one of the best UK growth shares to buy as of Q4 2023.
SGE stock price today
4. Standard Chartered
About
Founded in 1969 and based in London, Standard Chartered has more than a century and a half of rich tradition in providing financial services. The bank is known for its formidable international presence and for fostering cross-border trade and investment. In fact, it does not conduct retail banking in the UK, and approximately 90% of its profits come from emerging markets in Africa, Asia, and the Middle East.
On the wings of globally rising interest rates and coupled with prudent financial decisions, Standard Chartered has consistently beaten estimates and delivered increased growth in sales and revenue. The company is listed on the London Stock Exchange and represents a constituent of the FTSE 100. Additionally, the Financial Stability Board considers it a systematically important bank.
STAN stock price today
5. 3i Group
About
Founded in 1945, 3i has accumulated over 75 years of experience and become a leader in its sector. The company specializes in investing and providing growth capital to businesses in various industries, such as technology, manufacturing, healthcare, and consumer goods.
3i’s strategic approach aims at all stages of development, with the company investing in both early-stage ventures to full-fledged firms with additional growth potential. Another highlight includes taking an active role in the target companies’ management to increase value and boost financial performance.
The group’s focus on a long-term investment horizon and shrewd financial policies have led to a sustained rate of growth and rising profits. As one of the best UK growth shares to buy now, III is listed on the LSE and remains a constituent of the FTSE 100 index.
III stock price today
How to buy/sell or trade UK growth shares CFDs: Step-by-step
You can trade all the UK growth shares on this list with the following steps:
Step 1: Create a trading account
To start trading stock, you first need to register an account with a regulated trading platform. Our recommended candidate for buying/selling or trading UK growth shares is Plus500, a reliable platform for trading Contracts for Differences (CFDs). These derivative instruments enable you to speculate on the price movements of underlying assets without having to own the assets yourself.
Notable features of Plus500 include:
- Free demo accounts;
- Fast and reliable order execution;
- No commissions and tight spreads;
- Multi-asset CFDs on more than 2,000 financial instruments, including stocks, Forex, crypto, ETFs, commodities, and more;
- Mobile trading;
- Convenient deposit options via PayPal, Visa, Mastercard, etc.;
- Fast and secure withdrawals;
- Leverage of up to 1:30;
- Real-time quotes.
Recommended Multi-asset Broker for Online CFD Trading
-
Reliable & Regulated by CySEC (#250/14) - Plus500 Ltd is a FTSE 250 company listed on the London Stock Exchange
-
Wide range of instruments - CFDs on stocks, crypto, forex, commodities, ETFs, and more
-
Low cost investing - No commissions and tight spreads.
-
Transparent pricing on overnight funding, currency conversion fees, guaranteed stop orders, and inactivity fees.
-
Advanced platform - Top notch analytical tools, real-time quotes, fast order execution, secure withdrawals
Here is a brief summary of how to set up an account on Plus500 and start trading UK growth shares:
- Sign-up: Visit the platform’s website and register an account using your personal information;
- Identity verification: Most trading platforms enable Know Your Customer (KYC) and anti-money laundering (AML) regulations. As part of the verification process, you may need to present an ID, such as a passport or driver’s license, and sometimes proof of address, like a utility bill;
- Deposit funds: Once your account is verified, you should transfer some funds for trading shares. The available payment methods usually include bank transfers, credit/debit cards, and online transaction services like PayPal. The choice mostly depends on your preferences.
Note
Step 2: Trade UK growth shares
If you are ready to trade UK growth stocks, go through the following steps:
- Step 1: Look up the stock on the trading platform by searching for its stock symbol, like IHG, STAN, or III. Locate the CFD option among the available choices for trading;
- Step 2: Since you expect these growth shares to rise in value, go long (buy) rather than short (sell);
- Step 3: Designate the number of shares you wish to trade. Never spend on trade what you cannot afford;
- (Optional step 1): Set your desired leverage, potentially multiplying your exposure to Carnival stock. Margin trading increases both the potential gains and losses, so use it with caution;
- (Optional step 2): Set risk management parameters, such as setting stop-loss and take-profit orders. These orders automatically close your position when the stock price reaches a certain threshold, cutting your losses or securing the profits;
- Step 4: Confirm your trade order.
Step 3: Monitor your position
Once your CFD position is open, closely monitor the market’s price movements of the UK growth shares and the performance of your investment. Do the following:
- Monitor the stock price and market trends;
- Change your trading strategy if the new market environment requires it;
- Once you reach your trading goals or otherwise want to exit the trade, close your stock CFD position.
Additional fees
When conducting CFD trading, consider the fees that could apply to your trades, such as:
- Overnight funding: Applied when you hold a position beyond a specific time;
- Currency conversion fee: For transactions in a currency that differs from your account’s preferences;
- Guaranteed stop order: A unique risk management tool that closes your position at a specific rate but can result in a wider spread;
- Inactivity fee: Some platforms impose an inactivity fee for prolonged idle account periods.
Metrics to consider when trading UK growth shares
There is no single general formula to follow when estimating which UK growth shares to invest in, as many factors depend on the company, its management, plans, and financial trajectories.
Estimating the future is an ungrateful task, and there is no sure way to know how the companies will scale, innovate their portfolios, or deal with increasing growth. Additionally, a lot depends on your personal preferences.
Some vital indicators can help you assess the stock’s potential. Consider the following:
- Past EPS growth: Earnings per share (EPS) indicate the business’ profitability, and you can calculate it by dividing the profits by the company’s outstanding shares. Positive and consistent EPS growth is an excellent indicator of the stock’s growth potential. Look for constant growth of at least 6% (for large companies) or 12% (for companies with revenues lower than $400 million) for at least five years;
- Future earnings growth: Public companies release financial statements with estimates for the following quarter or year. Compare the future expected growth rates with the industry’s average and check whether the company’s ambitions have solid grounds in reality;
- Profit margins: To confirm the sustainability of the increased sales, check the company’s profit margins. Low profitability and high growth indicate that the company has issues controlling its overhead costs. Bear in mind that successful start-ups are not expected to become profitable for the initial several years;
- Return on equity: Return on equity (ROE) demonstrates the amount of profit generated with the shareholder investments, and it shows that the management does a good work leading the business and generating returns from its shareholders’ initial capital.
- Growth rate: You should aim at companies with an annual growth rate of 15%. Anything above this is, of course, even better.
Pros and cons of trading UK growth shares
Investing in growth stocks can have high potential rewards, but, as with all investments, it comes with a risk. Some of the pros and cons of trading UK growth shares include:
Pros
- High potential returns: Growth shares represent companies with an above-average growth rate compared to the industry, which means there is potential for significant capital appreciation, leading to high returns on your initial investment;
- Innovation, new trends, and technology: Many UK growth shares come from industries like software, healthcare, and renewable energy, which can be at the helm of global innovation. Additionally, companies that take advantage of worldwide trends, like hospitality capitalizing on post-COVID recovery, can also experience massive growth;
- Long-term growth: UK growth shares commonly reinvest their earnings into further expansion, which can result in sustained long-term growth and value creation for shareholders;
- Diversification: Investing in growth shares can help diversify your portfolio, reducing risk by diverging from income-generating assets like dividend stocks or bonds.
Cons
- High volatility and risk: Growth shares can be highly volatile assets with sudden and sharp price fluctuations, which can upset risk-averse investors;
- Low or non-existent dividends: Growth companies usually reinvest their profits into further expansion, reducing or cancelling the dividend payments. A lack of passive income can detract some investors from these stocks;
- Market timing: Timing is crucial when investing in growth shares, as trading at the wrong time or during a market downturn can result in substantial losses;
- Overvaluation: Growth shares are sometimes prone to overvaluation due to high investor demand, potentially causing a price bubble that will burst.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about the five best UK growth shares to buy now
What are growth shares?
Growth shares are stocks that are growing at a much faster rate compared to the rest of the industry or market. Traders interested in UK growth shares profit from capital appreciation rather than dividend payments or other passive income forms.
Do I need to own physical UK growth shares to trade them?
No, you do not need to own the growth stocks to trade them. CFDs let you speculate on UK growth share price movements without holding them yourself.
Should I invest in UK growth shares?
The answer depends on your personal preferences, as well as key metrics such as EPS, future earnings predictions, profit margin, ROE, and future company plans. Make sure to do your own research before trading.
Is investing in UK growth shares risky?
Growth shares are considered a high-risk, high-reward financial asset, and therefore, such investments carry more risks than other, more passive trading methods. Maintaining extreme growth is incredibly difficult as simultaneously scaling operations, constantly innovating, and remaining profitable require outstanding management and company performance.
