Two growth stocks firmly on my radar are YouGov (LSE: YOU) and Telecom Plus (LSE: TEP). Here’s why I’d be willing to snap up some shares when I next can!
YouGov
The firm provides subscription-based international research and insights via market data products to 4,300 clients across the globe.
Over a 12-month period, the shares are up 23% from 930p at this time last year, to current levels of 1,150p.
From a bullish view, YouGov’s past performance is rather impressive. The business has consistently grown earnings for a number of years. Plus, analysts reckon double-digit growth is on the cards for this year, and next. However, forecasts don’t always come to fruition. Furthermore, past performance isn’t an indicator of the future, but I use it to gauge if a business is being run well and solid performance can indicate that.
Moving on, I’m particularly buoyed by the firm’s use of artificial intelligence (AI) and machine learning in its products. As the AI revolution ramps up, YouGov could capitalise through its offering and grow its performance and returns.
Speaking of returns, a dividend yield of 0.8% isn’t going to boost my second income stream hugely. However, I reckon this rate of return could grow, in line with the business. Although, I’m aware that dividends are never guaranteed.
From a bearish view, two issues worry me. Firstly, cyber attacks and other technology-related issues are a major risk. The other issue is the current valuation. The shares trade on a price-to-earnings ratio of 36. Any bad performance or negative news could send the shares tumbling.
Owner of the Utility Warehouse brand, Telecom proudly boasts being the UK’s best multiservice utility provider. Holding one account allows consumers to access a number of services, such as broadband, energy, mobile, and insurance.
The shares are down 21% over a 12-month period from 1,930p at this time last year, to current levels of 1,516p.
Economic turbulence, including inflationary pressures, rising interest rates, and a cost-of-living crisis, have hurt many stocks.
It’s hard to ignore Telecom’s performance growth since its inception, and phenomenal growth track record over the years. A dividend yield of 5.5% today is impressive, supported by a healthy balance sheet. What’s more impressive is the fact the dividend hasn’t been cut, and has actually risen for 15 years!
Analysts reckon performance and returns will continue on an upward trajectory. A big part of this is linked to consumers looking to make their budgets stretch further. Plus, the draw of managing every utility under one account is an excellent unique selling point.
However, there is one risk that I’m wary of. Telecom doesn’t utilise traditional marketing to sell its products, and grow. It employs ‘partners.’ Think of agents selling door-to-door or in a shopping centre. Other businesses have fallen foul of mis-selling practices in the past using this method. My worry is that changing regulation could dent Telecom’s burgeoning business and excellent partner model, which has driven growth for many years.
This post was originally published on Motley Fool
