I’m always on the hunt for top growth stocks to add to my portfolio. These are the type of companies that I hope could genuinely have a shot at giving me serious returns in coming years. It’s always a bold claim to throw out there, so here’s my reasoning on two stocks that I think fit the bill right now.
A complete gifting experience
The first growth stock I’m thinking about buying is Moonpig (LSE:MOON). The online greeting card company went public back in February last year. Over a one-year period, the share price is down almost 47%.
The year high of 478p is almost double the current price of 251p, showing that upside potential isn’t an impossible dream. Personally, I think that the outlook for the business has improved with recent developments.
For example, it announced late last month its intention of buying Smartbox. This company owns Red Letter Days, a popular gifting and experience company. The synergies and enhancements that this could add to Moonpig’s existing offering is huge in my opinion. Given the potential financial growth of the combined entity, I think that the share price could have large upside in coming years.
I also like the fact that the growth stock isn’t content with just being a greeting card business and is actively expanding its reach. Its finances should be supportive of future investment, given that the company has a large adjusted EBITDA margin of 24%-25%.
As a risk, I did note recently that some early stage shareholders sold out. These asset managers could just be exiting their holdings for capital reasons. But if it’s more that these professionals don’t see any future benefit for this top growth stock, that is a concern for me.
Top growth stocks with long-term value
The second growth stock I’m looking to buy is Hargreaves Lansdown (LSE:HL). I appreciate that the share price is bleeding lower almost everyday. It’s down 50% in the past year and is at levels not seen for almost a decade.
This does make me cautious, and so I’m looking to buy in chunks over the next few months rather than all in one go. This can help me to achieve a better average price if it keeps falling.
My conviction for thinking that the share price could rally is based on a planned transformation of the business that was announced earlier this year. The company is aiming to become a lot more efficient in the existing retail investing operations, as well as focusing heavily on wealth management.
The wealth management sector is growing at the moment and also offers higher revenue potential from advisory fees rather than just commissions from booking trades for investors. I think that this growth stock could take off as it has the customer base already, so should be able to reinvent the business in coming years.
In the May trading update, it noted client growth of 90,000 this year to date, with a client retention rate 92.4%. If it can pivot these clients to wealth management, I think the sky is the limit for the share price. The big risk is if these new clients aren’t in the target market, in which case false optimism could exist about the revenue potential.