Interactive Investor

37 growth stocks to own in 2024

After last year’s selection of growth shares returned a 17% profit, this team of City analysts has picked the ones it thinks will excel over the next 12 months. The list includes some well-known FTSE 100 and FTSE 250 companies.

9th January 2024 13:42

by Graeme Evans from interactive investor

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Marks & Spencer Group (LSE:MKS), SSE (LSE:SSE) and easyJet (LSE:EZJ) are among the top picks after a City bank this week published its annual selection of growth-focused stocks for the year ahead.

Peel Hunt’s 37-strong list for 2024 also includes Tullow Oil (LSE:TLW), B&M European Value Retail SA (LSE:BME) and Dunelm Group (LSE:DNLM), as well as smaller companies including Ashtead Technology (LSE:AT.) and YouGov (LSE:YOU).

Its 33 picks for last year delivered a weighted-average total return of 17%, comfortably ahead of the 8% achieved in the FTSE All-Share after strong performances by Bank of Georgia Group (LSE:BGEO), Intermediate Capital Group (LSE:ICP), Vistry Group (LSE:VTY) and JD Sports Fashion (LSE:JD.).

Private equity investment firm Intermediate and housebuilder Vistry retain their places in this year’s list, which features a variety of companies with attractive growth characteristics.

The forecast price/earnings multiple for the 37-strong group is a median 14.7 times, with an average market cap of £1.2 billion. The technology sector has the most picks with five names, while retail has four entries, with builders, financials, media and transport three apiece.

Peel Hunt said: “After a tricky 2023, economic fundamentals should be a bit more supportive this year, albeit it may well be the second half of the year before growth becomes more obvious for some sectors.”

One of the standout selections is Marks & Spencer, which Peel Hunt continues to regard as “undervalued” despite shares doubling to a five-year high in 2023.

The bank said: “M&S is clearly holding out for long-term growth. The focus on improving value perceptions at a time where shrinkflation is rife shows management’s long-term intentions to make Marks a key player again.

“Astute cost savings are still coming through, and we expect a strong 2024 performance.”

Fellow homewares retailer Dunelm Group (LSE:DNLM), which delivered 21% share price growth in 2023, retains its place on the list for this year after Peel Hunt highlighted a 1,375p target price and flagged a 9% yield including special dividends.

It said: “Market forecasts assume about 5-6% annual pre-tax profit growth over the next three years, which feels conservative against the group’s investment initiatives.”

The shares of B&M European Value Retail have also enjoyed a strong run, with prospects boosted by a store opening plan that includes the addition of 51 larger Wilko sites.

Peel Hunt said: “We have no doubt B&M will win market share in the discount sector in 2024-26, both in absolute and like-for-like terms.”

The other retail-focused stock on the list is Moonpig (LSE:MOON), which enters 2024 with early signs of margin tailwinds and the significant opportunity to harness its data capabilities.

In the travel sector, easyJet (LSE:EZJ) shares have been backed to build on 2023’s 57% improvement after the bank reiterated its “Buy” recommendation and 740p target price.

It said: “The holiday business is unlocking easyJet’s growth potential and transforming the group into a structurally higher-margin business. We see the valuation as far too low.”

On Jet2 Ordinary Shares (LSE:JET2), it notes that forward bookings and pricing are up double-digit percentages amid signs that customers are prioritising holiday spend. The shares are backed to reach 2,200p.

The bank added: “Recent falls in the oil price and US dollar will likely be reinvested in service or passed to consumers through lower pricing, stimulating demand further.”

The biggest stock on the list is the renewable energy, thermal generation and electricity network business SSE, which Peel Hunt believes has gone from strength-to-strength over the past year in terms of earnings growth and investment plans.

Peel Hunt expects SSE to deliver adjusted earnings per share at a compound annual growth rate of 18% over the five years to 2026, supporting its price target of 2,060p.

Pan African Resources (LSE:PAF) is the smallest of the growth picks with a market valuation of around £325 million, with others including payments technology business Boku Inc Ordinary Shares (LSE:BOKU), private equity investor Pollen Street Ord (LSE:POLN) and European quarried materials firm SigmaRoc (LSE:SRC).

Ashtead Technology, the support services firm with a focus on offshore subsea activities, is also included despite nearly doubling in value over the past year. Peel Hunt has a 700p target price after highlighting the company’s “multi-dimensional growth opportunities”.

On Trainline (LSE:TRN), the key growth driver behind a target price of 460p is the potential for the online ticketing business to build European market share. Meanwhile, a clear leadership position in Partnerships housing means Peel Hunt expects Vistry to deliver higher returns and decent growth over the medium term.

The other Peel Hunt selections are 4imprint Group (LSE:FOUR), Alpha Group International (LSE:ALPH), Ascential (LSE:ASCL), Atalaya Mining (LSE:ATYM), Bytes Technology Group Ordinary Shares (LSE:BYIT), CVS Group (LSE:CVSG), discoverIE Group (LSE:DSCV), Empiric Student Property (LSE:ESP), Energean (LSE:ENOG), Genuit Group (LSE:GEN), Inchcape (LSE:INCH), Just Group (LSE:JUST), Ocean Wilsons Holdings Ltd (LSE:OCN), Primary Health Properties (LSE:PHP), Rathbones Group (LSE:RAT), Spire Healthcare Group (LSE:SPI)Telecom Plus (LSE:TEP), Trustpilot Group (LSE:TRST), Volex (LSE:VLX) and WAG Payment Solutions Ordinary Share (LSE:WPS).

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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