Every month, we ask our freelance writers to share their top growth stock ideas with investors – here's what they had to say for September!
[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]Beazley
What it does: This special risk insurance and reinsurance business operates in many areas, including professional indemnity, directors and officers, crime, health care, property, environmental liability, marine and political risks.
Written by Harvey Jones. Lloyd's of London Insurance Beazley (LSE: BEZ) is one of the unsung heroes of FTSE 100. Its shares are up 42.19% in 12 months and 91.92% in three years, but they never get the attention they deserve.
So despite beating the index, Beazley's stock still trades at a cheap multiple of just 4.82 times earnings.
Another reason is that it is dangerous. One or two major claims can affect the annual profit, and such is the nature of insurance, they are completely unpredictable.
Beazley is also at the forefront of climate change, as floods, storms and hurricanes are likely to increase the cost of claims.
However on 8 August it announced that it had doubled its first half profit to $728.9m, a record high. It also increased its combined ratio, a key measure of underwriting profitability.
Return on equity jumped from 18% to 28%. Beazley is also exploring a new opportunity in cyber liability insurance.
The yield is 1.89% but the board must complete a $325m share buyback by the end of the year. I am looking forward to buying a Beazley in August. At today's low prices, it would be rude not to.
Harvey Jones does not own shares in Beazley.
London Stock Exchange Group
What it does: The London Stock Exchange Group is a leading financial markets infrastructure and data provider.
Written by Edward Sheldon, CFA. I chose London Stock Exchange Group (LSE: LSEG) as my top growth stock this month. There are several reasons why.
One is that the company is doing well at the moment. For the first half of 2024, adjusted earnings per share were up 8.1% year over year. After this performance, the company increased its interim dividend by 14.8%.
Another is that the company is working with an AI powerhouse Microsoft developing a financial data platform (used by thousands of banks and investment managers worldwide). Looking ahead, I believe the company may be able to take market share from Bloomberg again FactSet. Microsoft CEO Satya Nadella said the products will allow banks to “more with less“.
Finally, stocks are on a strong high right now. And with the stock trading at a reasonable mid-20s P/E ratio right now, I think this trend has legs.
Of course, if the tech sector were to experience some weakness, this stock could experience a pullback. Taking a long-term view, however, I think there is a lot of potential.
Edward Sheldon is a shareholder in the London Stock Exchange Group and Microsoft.
S4 Capital
What it does: S4 Capital is a digital marketing agency network with a global business serving diverse blue-chip clients.
Written by Christopher Ruane. A few years ago, I got involved S4 Capital (LSE: SFOR) fell in value. That shows a number of risks that I think are still important, from the important person at risk of the important role of Sir Martin Sorrell, to the weak demand for publicity. Shares, trading in cents, continue to be risky in my opinion.
Still, even though the fast-growing company saw a decline in revenue, I expect it to return to growth in the next year or two. It indicated that it may also start a dividend.
Meanwhile, as advertising has shown more resilience in the current economy than some analysts expected, S4 may return to revenue growth sooner rather than later.
Provisional results are due on 19 September. So we will know how well the business has been doing – or not – recently. An impressive client list, a strong digital marketing offering and exceptional talent are among the competitive advantages I see.
Christopher Ruane is a shareholder of S4 Capital.
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