There’s a couple of reasons why I favour the FTSE over any other index right now. One of them is valuations. UK-listed stocks just haven’t been that popular amid concerns about the general health of the economy and Brexit.
But now there’s the exchange rate to think about. A year ago, £1 got me around $1.40. But the pound has got weaker and the dollar stronger. Today, £1 gets me $1.20, and some analysts think the pound may drop over the next couple of weeks to $1.15.
So, why is the exchange rate important? In the long run, I foresee the pound being a stronger position than it is now. If I invested in a US stock now, and the pound appreciated 10% over the next three years, then it would wipe 10% off the value of my investment.
As a result, I’m looking at UK-listed growth stocks instead of the NASDAQ. So, here are two of my top UK growth stocks I’d buy now.
Kropz
Kropz (LSE:KRPZ) is an Africa-focused phosphate rock mining company. Rock phosphate is the raw material that’s used to produce phosphate fertilisers. The company is looking to play a major role in the food industry in the decades to come.
The company’s main asset is in Elandsfontein, South Africa’s Western Cape province. Kropz hopes to produce rock phosphate from its Elandsfontein mine later this year. However, it has already been forced to delayed its first bulk sale, which is now forecast later this year.
Around 85% rock phosphate is used in fertiliser production. And it might not be a bad time to be entering the market as fertiliser prices have gone sky-high on the back of higher fuel prices.
Kropz also says that the Hinda rock phosphate asset in Republic of Congo could be “one of the world’s largest undeveloped sedimentary-hosted phosphate reserves“.
I’m a little concerned about when first production will be. And it’s worth noting that there’s a sizeable spread between the buying and selling price. Nevertheless, I see this stock as a good long-term investment.
Ceres Power
Ceres Power (LSE:CWR) is a fuel cell and electrochemical technology developer. There is clearly a lot of potential for any player in this area.
The company has been moving fairly slowly, but there are signs this stock might be about to take off. The AIM-traded firm recently announced that the completion of a China-focused joint venture with Bosch and Weichai Power was now expected to take place in the second half of the year.
Fuel cells won’t only be used in cars, but everything from powering homes to supporting massive cloud data centres. In partnership with Weichai, Ceres has developed a unique electric vehicle (EV) range extender system, using its SteelCell product, delivering high levels of efficiency and with very low emissions.
In June, Ceres Power also announced the signing of an agreement with Shell to deliver a megawatt-scale solid oxide electrolyser demonstrator in 2023. It will be used at Shell’s research and development technology centre in Bangalore where the hydrogen will be used in industrial processes on site. Such products could have huge potential in remote facilities or construction sites, such as Saudi’s NEOM project.