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Growth is good. Growth stocks offer substantially higher growth rates than the market average. If a company is growing rapidly, over time its earnings should increase and so should its share price. Here are two growth stocks I plan to keep in my portfolio for the next decade and beyond.
Renewable energy stock
The Renewables Infrastructure Group (LSE: TRIG) invests in onshore and offshore wind and solar farms in the UK and Europe. This trust first appeared a decade ago. It has grown its renewable energy generation asset base to around £3.7bn since then. The UK and the EU are interested in increasing the amount of renewable power generation capacity for security and decarbonisation reasons. There is scope for TRIG to continue to grow its asset base further over the next 10 years.
If this trust can increase its net asset value (NAV) per share over the next decade, then its share price should follow, as the two typically move in tandem. But right now, TRIG shares are trading at a 5% discount to NAV. I think it’s a good entry point. But it could also reflect investor concerns about power caps and windfall taxes, rising rates and cooling energy price inflation.
These are valid concerns. TRIG uses a revolving line of credit to purchase assets and then pays down the debt with capital increases. The higher rates make this more expensive. Revenues are linked to inflation. But, the trust has been delivered without rampant inflation in the past. Rates are expected to drop. Over the next decade, I think TRIG will continue to increase its NAV and also its share price, so I’ll stick with it.
table growth stock
games workshop (LSE: GAW) and its Warhammer franchise have delivered average annual sales growth of 21% and earnings per share of 33% over the past five years. That’s significantly better than the market average. And the company has an impressive management team with a long-term strategy that has always been clear and consistent:
- Continue to develop your Warhammer intellectual property and make your Warhammer-based hobby and business better and better.
- Create the world’s best fantasy and sci-fi board game products
- Explore licensing agreements outside of the core business for your intellectual property (IP)
Games Workshop reached an agreement with Amazon to make TV shows, movies and merchandise from your Warhammer IP, and Warhammer enthusiast Henry Cavill is ready to star. That’s the kind of tie-in that should boost license revenue for years to come.
Of course, there’s no guarantee that bringing a fantasy or sci-fi setting to the big (or small) screen will work as intended. amazon and Netflix knowing this. A bad adaptation wouldn’t attract many new fans to Games Workshops and possibly upset its core fanbase. But I think the Amazon partnership is an exciting prospect nonetheless.
It should make Games Workshop’s goal of getting a true triple A Warhammer video game developed by a major studio easier to achieve. That, and whatever Amazon produces, should boost license revenue over the next 10 years and increase demand for the company’s core business products and services. That’s why I plan to keep Games Workshop in my Stocks and Shares ISA for the next decade.
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