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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 the bill.
When it comes to growth stocks, the headlines have been grabbed by big American technology companies. And rightly so: people like NVIDIA and Microsoft They have achieved spectacular results recently.
However, it's not just companies in the ai race that have strong growth prospects. I think there are some interesting opportunities elsewhere right now.
right movement
The increase in interest rates has been a real brake on the right movement (LSE:RMV) share price. Despite a 25% increase in sales, the stock is still around the same level 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, making borrowing more expensive and causing demand in the real estate market to slow down.
The biggest risk for Rightmove is the possibility of this continuing. Inflation hit the official 2% target last month, but the Bank of England appears reluctant to lower rates.
There are some positive signs, however. Lenders have found ways to offer mortgages with lower deposit requirements, which has kept house prices stable.
In addition, both the Conservatives and Labour are promising to invest in housing after the election. This should mean strong demand for the UK's largest online property platform.
Rightmove's share price has suffered recently in an environment where interest rates have been higher, but now might be the time to consider buying shares for what's next.
Broadridge Financial
Listed in the USA Broadridge Financial Solutions (NYSE:BR) is probably not on the radar of many UK investors. But I think it is a really interesting stock that could be a great investment.
The company distributes investor materials to shareholders of other companies. This is something they could do themselves, but it is a time-consuming and expensive task.
Broadridge's scale allows you to do this at a fraction of the cost. Since the need to communicate with investors is unlikely to disappear, it has a dominant position in a major industry.
That's a powerful combination. However, even though the stock has been on a downward trend since the beginning of the year, a price-to-earnings (P/E) ratio of 33 means there is clear risk for investors.
However, the company's competitive position offers it good growth potential. The most conservative analysts' estimates expect earnings per share to reach $9.20 in 2026.
If that happens, the stock's current price implies a price-to-earnings ratio of around 21. Based on this, I think the stock appears to be an option to consider for investors looking for long-term returns.
Long-term investment
The best time to buy stocks is usually when investors are looking the other way. And I think this is the case with Rightmove and Broadridge at the moment.
In Rightmove's case, lower interest rates are the key to future growth, which should benefit both the share price and the underlying business.
In Broadridge's case, the business is less cyclical. Its dominant position should allow it to increase its profits through gradual price increases, which would drive the stock higher as a result.
