Image source: Getty Images
Growth stocks within a portfolio can significantly charge returns. And with the deadline for the Stocks and Dividends ISA approaching, now would be a good time to inject a little growth into the portfolio.
Here are two under-the-radar growth stocks worth considering.
AIM stock
First of all Boku (LSE:BOKU), an AIM-listed fintech focused on local payment methods (LPMs). It helps merchants drive more sales to people who pay for goods and services with their mobile phones. The Boku network serves more than 300 LPMs worldwide.
Believe it or not, more people today pay by LPM than by pass Visa or MasterCard. Indeed, all regions such as Southeast Asia are bank cards jumping and moving from cash to LPMs.
How? Well, the unbanked simply go to a local store with cash and fill up a wallet, which can then be used for e-commerce and streaming services.
What I like here is Boku’s program for blue-chip clients — it calls itself “a payment network trusted by tech giantsFor example, it helps Netflix again Spotify reach more subscribers worldwide by bundling mobile bills. It also supports Amazon in Japan.
Last year, Boku’s revenue grew 30% to $128.8m, while operating profit rose 205% to $18.9m. Consolidated revenue increased 71%. Management is confident they can continue to grow revenue by 20%+ over the medium term.
Looking ahead, one main risk I see is that Boku’s take rate – the fees received from transactions – could come under pressure as competition intensifies. Last year, it stood at 82 points.
However, the stock is down 32% since October, posting a price-to-earnings (P/E) ratio of 19.7. For a fast-growing company that likely has many years of double-digit growth ahead, I think that’s an attractive valuation.
FTSE 250
The second stock is Applied Nutrition (LSE:APN) from FTSE 250. Supported by JD Sports FashionThis is a founder-led sports and nutrition company.
Now, the biggest concern I had when the company went public in 2024 was competition. There are many companies that make protein shakes, pre-workout drinks, and supplements. What makes Applied Nutrition special?
Well, it aims to be the most trusted and innovative global brand in the market. And it’s making great strides towards that ambition, with secure shelf space at Asda, Tesco, Places to stay in Sainsburyand even Walmart in North America. Launched a range of 53 high protein food and snack products with Morrisons.
Speaking personally, I am a regular user of the company’s creatine products. And recently I started taking Applied Nutrition’s ‘sensitive vegetable’ powder, which is full of broccoli, celery, spinach, etc, and so it’s positively disgusting (in a healthy way).
Therefore, I believe that this trusted and innovative brand has an edge over competitors. Looking at the financials, this is evident, with full year earnings expected to be around £140m (nearly 31% growth and above previous market expectations).
An operating margin of 26% is also very healthy (no pun intended).
While rising inflation in the UK won’t help, this is a growing international business with diversification (Latin America is growing the most). And the global sports nutrition and fitness market is expected to grow at a compound annual rate of 8%, reaching £279bn by the end of 2028.
The forward P/E ratio here is just 18.3.
