My ISA currently contains a £500 windfall in dividend income. Should I invest it now? With charges so low, I reckon it’s a cost effective amount for a purchase. I’m lining up some top FTSE growth shares as candidates.
I invest mainly in dividend stocks. But when I see good growth opportunities, I’m happy to lean in that direction. It’s riskier, but with my modest £500 in uninvested dividends it’s not exactly betting the farm.
Second growth spurt?
I have been thinking of buying Darktrace shares for a little while now. The cybersecurity technology specialist dropped out of favour in 2022. The share price did pick up in February, and has now gained 35% in 12 months. But Darktrace shares are down 55% since their high point.
A number of analysts are a little bearish on the stock, and that might well hold the price back. But a top FTSE growth share candidate for my small cash pile? I might take the risk.
I was negative on Purplebricks in the early days of its meteoric rise. I saw too much hype, backed by insufficient substance. That’s history now, and the Purplebricks share price has dropped more than 75% over the past year. And it did jump a little on the back of director purchases in March.
The company only just turned a profit in 2021. And with inflation and interest rates rising, estate agents could feel the squeeze. But I think this might be another growth stock just getting its second wind.
A growth share that’s growing
But how about growth shares that are actually growing? Safestore Holdings appears to be one, up more than 60% over the past 12 months.
Demand for self storage is rising, Safestore is recording strong profits, and the valuation doesn’t look too high to me. Underlying earnings rose by 26% in 2021, and Safestore hiked its dividend by 35%. That’s a nice bonus.
The results indicate a trailing P/E of 33 based on adjusted diluted earnings per share (or just 7.6 on statutory diluted EPS). The adjusted figure might look high, and I suspect the shares could remain flat for a while now. This might be one I’d buy on the dips.
Shares down, earnings up
I’m going to finish with JD Sports, whose share price has been slammed in 2022. After the late 2021 rally collapsed, JD shares are now down 20% over 12 months.
What kind of top growth share is that? Well, while the share price is weak, the performance of the company itself is on the up. For the year ended January 2022, JD expects to report pre-tax profit (before exceptionals) of at least £900m. That’s more than twice the 2021 figure.
Will this earnings growth spur some share price growth? I await a date for full-year results.
Growth share risk
I think all of my picks share one thing, and that’s potential volatility. They could all be adversely affected by the economic squeeze that’s putting increasing pressure on us. But I can’t help seeing them all as offering top growth share potential too.
My £500 may well go on one of them.