Two FTSE growth stocks just came into my focus today, while I plan my stock investments for the new financial year. Both have just posted encouraging updates. These indicate that there could be even better times ahead for them in 2022 and beyond. But before I invest my £1,000 in them, it is essential for me to figure out the full picture.
Hollywood Bowl is a growth stock to consider
The first of these is the Hollywood Bowl Group (LSE: BOWL). Its stock price is up by almost 10% as I write this Friday afternoon. This follows its trading update for the six months ending 31 March 2022. During this time, it has reported record first-half revenues and cash generation from operations. After recording losses during the pandemic, it has also been profitable over the past year. It has now decided to pay dividends as well.
The company, which as the name suggests, operates bowling centres, is also expanding. It opened two new centres in the UK in the last six months and is on track to open six more over the rest of its financial year (FY). To meet the challenge of rising energy prices, it has hedged itself until the end of FY2024. Moreover, it is also installing solar panels at its centres now, which are expected to provide 33% of its electricity requirements by the end of FY22.
Risks to the FTSE stock
I wrote about the stock around a year ago, and was cautiously bullish on it then. I am even more so now, but the risks cannot be overlooked. The most glaring of these is the rise in coronavirus cases. As someone who has suffered from the virus recently, there is a part of me that is wondering if it might be a good idea to slow down on visiting too many public places. My point is, I do not think we should take the pandemic too lightly even now. Who knows what happens next!
Also, rising inflation is bad for discretionary spending. If prices rise too much and the economy slumps, the outlook for the group might suffer, even if it is able to keep its own costs in check.
Jet2 shows improved performance
Jet2, the other stock on my radar now, has similar challenges. The flights and holiday packages’ provider is still making losses, after it was hurt by the pandemic as well. But there is good news for it too.
The stock is up 6% this Friday, after it reported improving load factors for the year ending 31 March 2022 following the removal of restrictions. And it expects trends for this summer to be positive too. It has also hedged up to 95% for its fuel requirements, which sounds quite impressive to me.
What I’d do
I think it could be a good stock to buy, but between Hollywood Bowl and Jet2, I am more inclined towards the former. It is already making profits, and is less likely to be hit by another wave of the pandemic, if that happens.