Stock market

These 3 growth stocks still look cheap despite hitting FTSE all-time highs.

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I’m nervous about buying growth stocks after a market crash, because I fear overpaying at the top of the cycle. I’m happier when the market is in a dump, and there’s an opportunity to buy down.

It makes me nervous to buy. FTSE 100 Growth stocks today, as the index breaks new all-time highs. Yet plenty of stocks still look really good value, including these three.

Insurer of Lloyd’s of London Beazley (LSE: BEZ ) looks very cheap trading at just 4.18 times trailing earnings. Specifically trading at 12.4 times the FTSE 100 overall.

Bargain shares

I expected to see a disappointing share price performance but in fact Beazley’s share price has risen 17.06% over the last three months and 9.53% for the year.

Beazley got a real lift on March 7, when it reported that full-year 2023 profit before taxes rose 155 percent to $1.25 billion. Gross premiums have been rising over the years but there is one key metric it has no control over, and that is claims. Costs increased during the pandemic, for example, putting Beazley at a loss.

Investors receive a modest dividend, currently yielding 2.23 percent annually, but the board recently agreed to a $325 million share buyback program. It’s a successful company that’s getting cheap, and I’m tempted to buy it.

Here’s an inexpensive growth stock I bought recently: JD Sports Fashion (LSE: JD). I stood on the sidelines for years, watching his shares rise and rise, but decided I was too late to join the fun.

I saw my chance on January 4, when its shares crashed by 20% after the board warned that profits would be £125m short of forecasts after a poor festive trading period. I bought them on January 22nd.

A trade update on March 28 suggested that JD had stopped the mold, though “Challenger” The market was still causing problems. My position is up a modest 4.38%. I think there is still a buying opportunity here, with JD Sports shares down 26.08% over the 12 months.

The FTSE 100 is flying.

The stock looks well priced, trading at 8.68 times trailing earnings. Sports and fashion retail is a tough market but with a five-year outlook, I am optimistic.

Meanwhile, the owner of British Gas Centrica (LSE: CNA ) is trading incredibly cheap at just 3.39 times earnings. It’s particularly surprising that its shares have been going gangbusters, up 19.75% over 12 months and 142.83% over three years.

Centrica’s share price got a real boost from the energy shock, but suffered from a pullback in gas and oil prices in 2023. Adjusted operating profit fell from £3.3bn to £2.72bn in 2022, a drop of 17.6%.

Despite this, the board increased the dividend by 33% to 4p per share. Yet it is not a high-income stock, with a modest trailing yield of 2.99%. Centrica has warned that revenues will decline in 2024, based on the assumption that oil prices will continue to decline. That may change though. A lot now depends on the Middle East.

JP Morgan Recently highlighted how affordable Centrica is today. He believes the group’s £1bn share buyback could be extended to a further £500m from the summer. We will see. Given the low price, I’m tempted to buy it today.


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