2 Growth Stocks to Consider Buying in July

Extract: A company with a dominant position in a major industry can be a great investment. Stephen Wright looks at two growth stocks that fit that criteria.

When it comes to growth stocks, the headlines have been taken by the big US tech companies. And rightly so, as Nvidia And Microsoft have achieved spectacular results recently.

But it’s not just companies that are getting into the AI race that have good growth prospects. I think there are interesting opportunities elsewhere right now.

Shift right

The rise in interest rates was a real brake on Shift right Share price (LSE:RMV). Despite a 25% increase in sales, the stock price is still about the same as it was five years ago.

The main reason is that interest rates have risen from less than 1% in 2019 to more than 5% recently. This has made borrowing more expensive and caused a slowdown in demand in the real estate market.

The biggest risk for Rightmove is the possibility that this situation will continue. Inflation hit the official 2% target last month, but the Bank of England appears reluctant to cut rates.

There are, however, some positive signs. Lenders have found ways to offer mortgages with lower deposit requirements, which has allowed house prices to hold up well.

Additionally, both the Conservatives and Labour are promising to invest in housing after the election, which is expected to translate into strong demand for the UK’s largest online property platform.

The Rightmove share price has struggled in recent times amid higher interest rates. But now may be a good time to consider buying the stock for the future.

Broadridge Financial

Listed in the United States Broadridge Financial Solutions (NYSE:BR) is probably not on the radar of many UK investors. But I think it’s a really interesting stock that could be a great investment.

The company distributes investor materials to shareholders of other companies. This is a task it could do itself, but it is time-consuming and expensive.

Broadridge’s scale means it can do this at a fraction of the cost. As the need for investor communication is unlikely to disappear, the company has a dominant position in an important industry.

It’s a powerful combination. However, despite the stock’s decline since the start of the year, a price-to-earnings ratio (PER) of 33 means there is clear risk for investors.

The company’s competitive position nevertheless gives it good growth prospects. The most cautious analysts are counting on earnings per share of $9.20 by 2026.

If that happens, the current share price implies a price-to-earnings ratio of around 21. Based on this, I think the stock looks like a stock worth considering for investors looking for long-term returns.

Investing for the long term

The best time to buy stocks is often when investors are looking away. And I think that’s currently the case with Rightmove and Broadridge.

With Rightmove, lower interest rates are key to future growth. This should benefit both the share price and the underlying business.

In the case of Broadridge, the business is less cyclical. Its dominant position should allow it to increase profits through gradual price increases, which should push the stock price higher.

The post Two Top Growth Stocks to Consider Buying in July appeared first on The Motley Fool UK.

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Stephen Wright has no position in any of the stocks mentioned. The Motley Fool UK has recommended Microsoft, Nvidia and Rightmove Plc. The views expressed on the companies mentioned in this article are those of the author and may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a broad range of ideas makes us better investors.

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