However, decent growth rarely goes unrecognised by the market. So, valuations tend to be higher for companies with good earnings prospects. But a company’s valuation can be viewed as a mark of quality. And I’d expect to pay more for a business growing its earnings by 50% a year than I’d pay for one growing at 20%.

Software for businesses

One recent purchase I’ve made is Cerillion (LSE: CER). The company provides billing, charging, and customer relationship management software solutions for several industries. Its client sectors include telecommunications, finance, utilities, and transportation. 

In May, the company posted a robust set of half-year results. And chief executive Louis Hall said the directors see “excellent opportunities for continuing growth and [that] the new customer sales pipeline has grown significantly”.

City analysts expect earnings to grow by around 30% in the current trading year to September 2022 and by about 19% the following year. But with the share price near 1,059p, the forward-looking earnings multiple is running at just over 31 for 2023. That’s not cheap and the valuation adds a layer of extra risk for investors. 

But I’m hopeful Cerillion can keep up its operational momentum for years to come. And a recent major contract win announced in July encourages me to believe the signs are good.

Focused on US healthcare

I’m also holding Craneware (LSE: CRW). The UK-based company develops licensing and ongoing support of computer software for the US healthcare industry. 

The company released a strong trading update last week. And chief executive Keith Neilson said he’s looking forward to the future “with confidence”.  

Just over a year ago, Craneware acquired a company called Sentry. The addition increased scale and offering of the business. Neilson said around 40% of all US hospitals now use Cranware’s services.

Meanwhile, City analysts predict growth in earnings of just over 9% in the current trading year to June 2023. And with the share price near 1,730p, the forward-looking price-to-earnings rating is around 22. Not cheap. But I reckon Craneware could be developing some decent operational momentum. Time will tell. But this investment is not without risks.

Payment solutions

Another recent purchase was Equals (LSE: EQLS). It’s a UK-based fintech payments company. It provides small and medium-sized enterprises with a suite of payments products, such as foreign exchange transactions, prepaid card solutions, faster payments, and accounts for receipts and payments. 

In July, the company released a trading update trumpeting “84% growth in revenue and continued strong product uptake”. And chief executive Ian Strafford-Taylor said he believes revenues are “highly inflation-resistant“.

Meanwhile, City analysts predict a meaningful return to positive earnings in 2022 followed by an almost 35% uplift in 2023. Of course, any company can miss its estimates. And one risk is that the business operates in a competitive sector.

However, with the share price near 99p, the forward-looking earnings multiple is around 16 for 2023. And I think that valuation looks fair.

Although there is no guarantee of success, my plan is to hold all three of these stocks for years as the underlying growth stories play out.

Here, I’m going to highlight one AIM-listed company I’m very bullish on right now. If I was looking to invest in AIM shares today, this stock would be one of my first purchases.

One of my top AIM stocks in 2022

The company is Cerillion (LSE: CER). Founded in 1999, it’s a little-known technology business that provides billing, charging, and customer relationship management (CRM) solutions, predominantly to telecommunication companies. A global operator, it has over 80 customers across 45 countries, including 3, Airtel, Nokia, and Liberty Latin America.

Why I’m bullish on Cerillion

There are a number of reasons I’m bullish on Cerillion. One is that the company is generating strong growth as telecomms companies move to digitalise and streamline their back-office processes.

Over the last five financial years, revenue has climbed from £8.4m to £26.1m. And for the year ending 30 September, analysts expect revenue of £31.3m, which would represent top-line growth of around 20%. For the following year, the consensus revenue forecast is £37.7m.

It’s worth noting that in May, Cerillion published a very strong set of H1 results. For the six months ended 31 March, revenue jumped 26% to £16.1m with annualised recurring revenue up 9% to £9.8m. Meanwhile, adjusted earnings per share were up 62% to 18.6p. On the back of these strong results, the group hiked its half-year dividend by 24% to 2.6p.

“We continue to view prospects very positively,” said CEO Louis Hall, who also owns a large chunk of Cerillion stock.

A high-quality company

Another reason I like this AIM company is that it’s very profitable. Over the last five financial years, gross margin has averaged 75% while return on capital employed (ROCE) has averaged 16%.

Additionally, it has been a reliable dividend payer in recent years. And the payout has grown at a healthy rate.

Fair valuation

Finally, the valuation seems quite reasonable to me. With analysts forecasting earnings per share of 37.5p for next financial year, the forward-looking price-to-earnings ratio is around 24. I don’t see that as high, given the company’s growth rate and high level of profitability.

AIM stocks can be risky

Of course, there are a few risks to consider here. One is customer concentration. In FY2021, Cerillion’s largest customer was responsible for 20% of revenue while its top five customers brought in 52% of revenue. If it was to lose one of these customers, its revenues and profits could take a hit.

A second is share price volatility. Cerillion is a small company with a market-cap of just £265m. Share prices of companies this size tend to fluctuate quite a bit.

Overall, however, I see a lot of appeal in Cerillion. At its current price, I’d be very comfortable buying this AIM stock for my portfolio today.

Here are two UK shares that have been winners for investors recently. I’d buy both today, as I believe they have plenty of room to run.

New all-time highs

Let’s start with Calnex Solutions (LSE: CLX). It specialises in telecommunications network-testing solutions. Recently, its share price hit new highs. Yet I think this is just the start of the growth story.

The rollout of 5G network technology will require an enormous amount of testing in the years ahead. For networks to work seamlessly (and handle new technologies such as autonomous vehicles), they’ll need rigorous testing. That’s where Calnex comes in. Its solutions help network carriers prove that new systems operate effectively, and conform to strict international standards.

A recent trading update revealed that the company has a lot of momentum right now. Not only did it say the strong levels of trading in the first six months of FY2022 (its year ends 31 March) had continued, but it also said it begins FY2023 with a record order book across all product lines. As a result of the order book strength, it said that revenue and operating profit for FY2023 would be “materially ahead” of market expectations.

In terms of risks, supply-chain challenges are one to consider. Share price volatility is another. This is a small company with a market-cap of just £130m. So its share price is likely to swing around a bit.

Overall, I’m excited about the potential here. With the stock trading at just 26 times this year’s expected earnings, I see it as a strong buy.

Strong momentum

Another stock that I believe has a lot of growth potential is Cerillion (LSE: CER). It’s a small British technology company that provides billing, charging, and customer relationship management solutions, predominantly to telecommunication companies. Its share price is up more than 50% over the last year. However, I see the potential for significant upside from here on.

It’s been a while since Cerillion provided investors with a trading update yet in the last one, posted in November, management was very confident in relation to the prospects for this financial year.

“With a record back-order book and strong new business pipeline, we remain confident of continued momentum,” said CEO Louis Hall.

Analysts expect revenue of £31.2m for the year ending 30 September for growth of about 20% year-on-year.

It’s worth noting that this year Cerillion has been positively recognised in two Gartner industry reports and won the ‘Best Performing Company – Business & Consumer Software’ award at the annual Megabuyte Quoted25 awards event. That celebrates the best-performing technology companies in the UK. This recognition suggests it’s doing something right.

Of course, Cerillion shares could get caught up in another tech sector sell-off. I expect tech shares to be volatile this year interest rates rise. Being a small company adds to the volatility.

However, with the stock at just 25 times this year’s forecast earnings, I think the risk/reward proposition here is very attractive.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Top stocks for a growth focused Stocks & Shares ISA

Small-cap growth stocks have been out of favour, which I think presents opportunities for long-term investors. Cerillion (LSE: CER) strikes me as one potential top growth share for my ISA. Another top option, in my opinion, is Franchise Brands (LSE: FRAN).

Cerillion is a provider of billing, charging, and customer management systems. It was formed in 1999, so is an established company, giving me confidence that it has strong customer relationships and a service that is in demand.

It has shown strong sales and revenue growth. When it comes to the latter, revenue has gone from 8.5m in 2016 to £26.1m in 2021.

Another benefit of the strong financial performance of the group is that the dividend is growing strongly. It has gone from 4.5p in 2018 to 7.1p in 2021.

A current ratio (current assets minus current liabilities) over two indicates there is good balance sheet strength. That potentially protects the downside risk of investing in Cerillion. But, if technology stocks keep falling, Cerillion may just get pulled down along with other stocks.

All in all, Cerillion looks like a high growth stock trading at a reasonable price. The price-to-earnings growth (PEG) ratio, for example, is only 0.8. This indicates the shares are not expensive. That’s why I’m tempted to add the shares when I have next year’s ISA allowance.

Expensive – but worth it?

Franchise Brands is unsurprisingly a franchisor. It owns franchises across a B2B division comprised of Metro Rod, Metro Plumb, and Willow Pumps, and a B2C division that incorporates ChipsAway, Ovenclean, and Barking Mad. In November 2021, it acquired Azura Group, a franchise management software system developer that the group says represents an important step in its digital journey. It could both improve the operations of the group’s franchise businesses, and also be sold as a service to other businesses.

Franchise Brands has seen rapid revenue growth in recent years. It has gone from £4.5m in 2016 to £49m in 2020 (the latest full-year figures).

Like with Cerillion, the strong performance allows management to grow the dividend quickly.

The biggest pause for thought would be that the shares are not cheap. They trade on a P/E of 27, while earnings growth has been a bit volatile and actually declined in 2020, making the shares expensive on a PEG ratio basis. As with all franchisors, a perennial risk is that it falls out with major franchisees, as has been seen with Domino’s Pizza in recent years. 

Nonetheless, with management’s strong track record, good revenue growth, and the potential for big dividend increases, I like the share.

Cerillion and Franchise Brands are, in my opinion, two top UK shares to add share price growth and could therefore be ideal for my new Stocks & Shares ISA allowance. 

My strategy in situations like this is always the same. I stay calm, and look for high-quality stocks that have been sold-off unfairly. With that in mind, here are three shares I’d buy in the current stock market carnage.

This UK stock looks oversold

One FTSE 100 stock that strikes me as a ‘buy’ right now is Rightmove (LSE: RMV), which owns the UK’s largest property website. Its share price has fallen from around 800p to near 630p this year, and I think this weakness has created a fantastic buying opportunity.

I can’t see Rightmove being impacted that much by what’s going on in the world today. As the owner of a UK property website, its fate is largely tied to the health of the property market. Of course, if rising interest rates were to cause a recession, or a huge slowdown in the property market, RMV could suffer.

However, I think the chances of this happening are relatively low. It’s worth noting that full-year 2021 results, posted today, were strong. And City analysts expect healthy growth in 2022.

After the recent share price weakness, RMV has a forward-looking P/E ratio of 27. I see that as an attractive valuation, given the company’s brand power and growth track record. 

Incredible growth

Turning to the US market, I really like the look of Alphabet (NASDAQ: GOOG). Earlier this month, the owner of Google and YouTube saw its shares trading near $3,000. However today, they’re near $2,650 and I see a lot of value at that level.

Alphabet’s recent Q4 2021 results were phenomenal. For the period, the group generated revenue growth of 32% year-on-year, along with a 38% increase in earnings per share.

Looking ahead, I expect Alphabet to get much bigger. This company has a lot of growth drivers, and I don’t think it’s likely to be impacted that much by the current geopolitical crisis.

The biggest risk here, to my mind, is regulatory intervention. In the years ahead, Alphabet could be fined, or even broken up by regulators. I’m comfortable with this risk however. At its current valuation (the P/E ratio is in the low 20s), I see GOOG as a strong ‘buy’.

I expect this stock to bounce back

Finally, in the UK small-cap space, I now see a lot of appeal in Cerillion (LSE: CER). It’s an under-the-radar software company that provides billing, charging, and customer relationship management solutions. At the start of the year, its share price was above 900p. Now it’s near 650p.

Cerillion has generated strong growth in recent years and in its last trading update it was very confident in relation to its growth prospects for 2022.

“Prospects for ongoing growth remain very strong. With a record back-order book and strong new business pipeline, we remain confident of continued momentum over the new financial year,” said CEO Louis Hall. So I believe the recent share price fall here is unjustified.

I’ll point out that if technology stocks were to keep falling, Cerillion’s share price could fall further. However, with the stock now trading on a P/E ratio of around 22, I think the long-term risk/reward skew here is attractive.

Here, I’m going to highlight five top AIM stocks I’d buy for 2022 and beyond. All five of these companies are already profitable (which reduces risk significantly), have good track records in terms of growth, and look set to benefit from powerful structural trends in the years ahead.

Software stock with momentum

One of my top AIM picks is Cerillion (LSE: CER). It’s a software company that provides billing, charging, and customer relationship management solutions for businesses.

There are a number of reasons I’m bullish here. For starters, the company has a lot of momentum right now. In its full-year results for the year ended 30 September 2021, revenue was up 25% to £26.1m while adjusted earnings per share (EPS) were up 105% to 25.5p. During the year, the group won a number of major new contracts.

Secondly, management appears to be very confident about the future. “Prospects for ongoing growth remain very strong. With a record back-order book and strong new business pipeline, we remain confident of continued momentum over the new financial year,” said CEO Louis Hall in the company’s full-year results.

Third, the company’s financials look very solid. Debt is low while return on capital employed (ROCE) – a key measure of profitability – is trending up.

Finally, the valuation seems very reasonable. At the current share price, the forward-looking price-to-earnings (P/E) ratio is about 30, which is not high for a software company.

Of course, there are risks to consider here. One is that, at this stage, recurring revenues are still relatively low (33% last financial year). So, the company will need to keep landing new contracts to generate top-line growth.

Overall, however, I think the risk/reward proposition here is very attractive for me.

Poised to benefit from economy recovery

My next pick for 2022 is Keystone Law (LSE: KEYS). It’s an innovative UK legal firm that operates a ‘platform’ model in which lawyers can work remotely.

There are two main reasons I like this AIM stock. The first is that the company looks well placed to benefit from the ongoing UK economy recovery. Higher levels of economic activity typically lead to higher demand for legal services.

The second is that as a platform business, the long-term growth potential here is significant. Unlike traditional legal firms, the firm is not constrained by office space. I expect its work-from-anywhere business model to be very appealing to lawyers across the country post-Covid.

A risk though is the valuation. Currently, Keystone Law sports a forward-looking P/E ratio of just under 40. This means the stock is priced for perfection.

This is a high-quality company, however. Over the last five years, revenue has climbed 163% while ROCE has averaged 26%. So, I think I can justify the higher valuation here.

A founder-led company

Another stock that could potentially benefit from the economic recovery is Alpha FX (LSE: AFX). It’s a leading provider of foreign exchange (FX) hedging services. It also offers payment solutions for businesses.

Alpha FX has a lot of momentum right now as well. In a December trading update, the company told investors that trading had remained “strong”. Additionally, it advised that revenue and earnings for 2021 would be ahead of expectations.

One thing I like about AFX is that the company is ‘founder led’. Research has shown that such companies often turn out to be good long-term investments.

I also like the growth here. Between 2015 and 2020, revenue climbed from £5.1m to £46m. For 2021, analysts expect revenue of £72m.

On the downside, this AIM stock is another one that’s expensive. Currently, the forward-looking P/E ratio is near 40. If growth slows, the share price could take a hit. I’m comfortable with this risk, however.

An stock for the 5G revolution

My fourth AIM pick for 2022 is Calnex Solutions (LSE: CLX). It’s a leading provider of testing and measurement services to the telecommunications industry.

The reason I’m bullish on CLX is pretty simple. Right now, the telecommunications industry is undergoing massive transformation as the fifth generation of network technology (5G) is being rolled out. 5G is ultimately the key to all the exciting new technologies we keep hearing about such as self-driving cars and remote surgery. This rollout of new telecommunications technology is likely to create a high demand for network testing services in the years ahead.

In November, Calnex posted a solid set of H1 results for the period to 30 September 2021. The company advised that it had experienced “strong levels of trading” in the first half of its financial year and that it was expecting this trend to continue in the second half. “We continue to capitalise on the global telecom industry’s transition to 5G and the growth of cloud computing,” commented CEO Tommy Cook.

A risk to consider here is the ongoing semiconductor shortage. This could potentially cause disruption. I think this is probably priced into the stock, however. Currently, the forward-looking P/E ratio is just 25, which is quite low relative to the company’s growth.

Growth at a reasonable price

Finally, I like Gamma Communications (LSE: GAMA). It’s a leading provider of business communications solutions.

One reason I’m bullish on Gamma is that the industry it operates in, ‘unified communications’, looks set for strong growth in the years ahead. According to Grand View Research, the industry is set to grow by around 21% per year between now and 2028. This growth should provide huge tailwinds for Gamma, which has grown its top line by over 100% in the last five years.

Another reason I like this AIM stock is that its share price has had a big pullback over the last few months. Back in September, the stock was trading above 2,300p. Today, however, it’s trading near 1,620p. I see this pullback as an opportunity. Currently, the forward-looking P/E ratio is just 23.

But of course, growth could slow in the near term. That’s because many businesses have pulled forward their communications spending during Covid. For long-term investors like myself, however, I think the risk/reward skew here is attractive.

Leading the change

Aveva Group (LSE:AVV) has been on my watchlist for a few months now. The software firm first popped up on my radar when I was looking for tech companies with a commitment to environmental conservation. I see this as a big marker for future performance in the tech sector over the next decade.

A large percentage of Aveva’s products focus on data management and cloud computing systems for the energy sector. Data-driven models of energy generation help optimise the supply chain, reducing environmental impact. Its £3.8bn purchase of OSIsoft looks like a move to fortify the data-management wing of the company. Aveva already works with industry leaders like BP, GlaxoSmithKline, and EDF. This is a big win in my books.

A risk is that the current energy and oil crisis could force companies to cut down on operational costs, which could affect Aveva. Another is share price volatility. A leadership shakeup in April and market concerns in September caused shares to slide dramatically. This tells me that traders are highly reactive to news about Aveva stock. Also, the company is set to release a trading update on 28 October. A positive result could cause a jump in share price.

Over the long term, this tech stock looks promising. And although shares look attractive at their current price of 3,690p, I am watching the company to gauge market reaction to the trading update before making an investment.

Booming tech stock

Cerillion (LSE:CER) has had an incredible year in the market with a return of 159% in the last 12 months. For an often overlooked FTSE AIM company, this run is a great sign for investors in the UK tech space.

The company provides customer management and billing systems primarily to the telecom industry. I am excited about recurring revenue in the software space as it denotes customer retention and satisfaction. Cerillion’s recurring revenue rose 26% in the first half (H1) of 2021. The software company has significantly expanded its global presence with an $18.4m agreement with Telesur in Suriname and Latin America. This boosted revenue from new orders by 148% to £23.6m (H12020: £9.5m).

A big concern for my potential investment is the inflated share price at the moment. At 815p, Cerillion shares are trading at a profit-to-earnings (P/E) ratio of 55 times. If a market crash were to happen, investors could flee, opting for more stable and cut-price options. Also, despite an increase in recurring revenue, it is a small percentage of the operation. Any disruption in the current deals could drop revenue in the future.

But, the company is still expanding well and showing signs of becoming a tech stock staple for my long-term portfolio. A trading update is due in November, but I would consider investing in Cerillion today to capitalise on a potential jump in prices next month.

Personally, I love this kind of volatility. That’s because it tends to throw up fantastic buying opportunities for long-term investors like me. With that in mind, here’s a look at three ‘high-growth’ UK stocks I’d buy today.

A top UK FinTech stock

One UK stock that strikes me as a buy right now is Alpha FX (LSE:AFX). It’s a fast-growing FinTech company that specialises in foreign exchange management and corporate payment solutions.

There are two main reasons I like AFX. The first is that the company’s growing at a phenomenal rate. Revenue for the six months to 30 June, for example, was up 90% year-on-year.

The second is that the company’s ‘founder-led’. Research shows that founder-led companies quite often turn out to be good long-term investments. To date, AFX CEO Morgan Tillbrook has certainly shown to be an adept leader.

This stock does sport a higher valuation. Currently, it has a P/E ratio of around 42, which adds risk. I’m comfortable with this though, given the company’s rate of growth and historical track record.

Under-the-radar tech stock

Another stock I like the look of right now is Cerillion (LSE: CER). It’s an under-the-radar technology company that offers billing, charging and customer relationship management software solutions.

This company’s also growing rapidly. Between FY2016 and FY2020, for example, revenue increased nearly 150%. For the year ended 30 September, analysts expect revenue growth of 23%.

Earlier this week, Cerillion posted a very encouraging trading update. This told investors it has a “strong pipeline” of new business opportunities from both existing and prospective new customers and remains well-positioned as it enters the new financial year. This leads me to believe the outlook for the stock is attractive.

As with AFX, there’s some valuation risk here. Currently, the stock sports a forward-looking P/E ratio of about 30. So if growth slows, the stock could fall.

I don’t see this valuation as a deal-breaker however, as Cerillion appears to be a high-quality business.

Poised for strong growth

Finally, a third UK stock I’d buy right now is Impax Asset Management (LSE: IPX). It’s a niche investment firm that specialises in sustainable strategies.

The reason I like this stock is quite simple. Today, interest in sustainable investing is booming. All over the world, investors have decided that they want to invest in companies that make a positive contribution to society. Impax is benefitting from this trend.

The increased interest in sustainable investing is reflected in Impax’s recent results. For the year to 30 September, the group saw record inflows of £10bn.

“Asset owner interest in the transition to a more sustainable economy continues to build. As an authentic, specialist investor with global reach, Impax has a strong foundation for further expansion,” said CEO Ian Simm recently.

A key risk here is that earnings could take a hit if global equity markets fall. This could hit the share price.

But with the stock currently more than 20% off its recent highs and now trading on a forward-looking P/E ratio of around 25, I think the risk/reward proposition is attractive.

FTSE AIM star

Founded in 1999, Cerillion is a provider of billing, charging, and customer management systems based in the UK. It focuses on providing its products and services primarily to the telecoms industry as well as others too. It has many customers across the world but some of its more recognisable names to the UK market are G4S and mobile network Three.

My best stocks to buy now are usually on an upward trajectory and Cerillion is no different. Its share price has increased in the past 12 months by over 160%. This time last year, shares were trading for 295p per share. As I write, shares are trading for 784p per share. So, what has contributed to this sudden share price explosion for the tech provider?

My best stocks to buy now perform consistently

Cerillion’s fiscal year runs from September to September. Full-year results are expected around November. In its most recent trading update released in May, it covered the six months to March as a half-year update. These results made for excellent reading in my opinion.

Cerillion reported record performance for new orders in H1, up 148% compared to 2020 levels. It also reported its largest ever contract win. Revenue rose by 25% compared to 2020 levels. Recurring revenue also rose an impressive 26%. In addition to all this, profit before tax was up 124% compared to the same period last year too. Net cash also rose by 60% too.

I understand that past performance is not a guarantee for the future. I personally use this as a gauge when assessing investment viability. Cerillion does have a favourable track record. In the past four years, revenue has been increasing year-on-year. In the same period, gross profit and net income have also been increasing year-on-year too. Most of my best stocks to buy now have good historic track records. 

Risk and my verdict

I have two main concerns with Cerillion and its investment viability. First, at current levels it is valued a bit high. With a price-to-earnings ratio of over 50, it could be susceptible to a share price drop on the back of negative news. In addition to this, recurring revenue has not always been its strong point. Recurring revenue can be a good combatant to top line uncertainty but despite increasing recently, Cerillion could do more to secure recurring revenue for the future.

There is a lot to like about Cerillion hence why I place it on my best stocks to buy now list. It has a strong balance sheet as well as a favourable performance track record. It also pays a dividend which would help me make a passive income if I invested. Furthermore, it also has a strong pipeline of future business ahead too which will help boost performance further.

Right now, I would be willing to buy shares at current levels. I believe full-year results will be favourable and result in a further share price rise. I would be willing to add shares to my portfolio at current levels and keep an eye out for full-year results and future performance too.

Here are two such stocks I’ve explored after their fast rise in early trading today. 

Cerillion rallies as profit doubles

The first is Cerillion (LSE: CER), which provides business software solutions, including those for billing and customer relationship management. As I write, it’s up 11% after it released results for the half-year ending March 31. 

A look at these makes it clear why investors are flocking to the stock. Its revenue is up 26% from the half-year ending March 31 2020 and pre-tax earnings are up a whole 124%. 

But even better are Cerillion’s prospects. Its new business pipeline is up 9%. According to CEO Louis Hall, the company is “very confident of continuing revenue and earnings progression”. 

While there appears little doubt that the company will continue to perform, it’s super-pricey as well. With a price-to-earnings (P/E) ratio of 76 times, its share price is at all-time highs. It has risen more than two times in the last year alone. I think this is one I’d buy on dips. 

Diploma raises guidance

Another UK share on a tear today is Diploma (LSE: DPLM), which provides technical products from wiring to cylinders and medical instruments to customers across industries. It’s up over 8% now from its last close after it reported robust results for the half-year ending March 31 as well. 

Its revenue is up by 29% from the corresponding half-year of last year and its statutory operating profit is up by 10%. It also talks of “exciting trends” for the second half, and expects “full-year results significantly ahead of our previous expectations”.

Much like Cerillion, Diploma’s share price is now at all-time-high levels. In the last year alone, it has risen by 68%. It too is trading at an elevated P/E of 67 times. 

In essence, both companies have the same story. They’re defensive stocks that have performed well and have bright prospects. My conclusion is no different. It’s a buy-on-dip stock as well for me. Sorry to sound like a broken record. 

Would I buy these UK shares?

But here is one thing I would bear in mind as a growth investor. Last year was particularly good for ‘safe’ stocks like Cerillion and Diploma that fulfil near-essential products for businesses to function. 

But cyclical stocks from pubs to cinemas have started looking promising to investors in the ongoing stock market rally. As their prospects improve on reopening, I reckon we’ll see more investor interest in them. 

With these two UK shares, yes, I’m looking for dips as buying opportunities. But I also want share price growth. Any share price increases may be relatively muted later in 2021. I’d keep that in mind before I’d buy them.