According to a KPMG report, the United Kingdom’s GDP growth is projected to slow in the second half of 2024 but is expected to rise slightly to 1.2% in 2025. This growth will likely be driven by a less restrictive monetary policy and ongoing improvements in real wages, which could boost consumption and business investment. However, in the longer term, GDP growth may be limited to around 1.1% per year due to historically slow productivity growth.
UK inflation is forecasted to rise to 3% by early 2025, after dropping below 2%, this increase is attributed to the ongoing economic recovery and the impact of interest rate cuts on the economy. The Bank of England is expected to take a cautious approach to easing monetary policy, with the base rate expected to reach 3.5% by the end of 2025. This indicates that the central bank will be careful not to overstimulate the economy, in order to avoid overheating and inflationary pressures.
UK consumers have been saving a larger portion of their income, which may continue to limit spending growth. While some of this increase in savings could reverse as interest rates fall, a significant portion is likely to remain, driven by long-term demographic trends and heightened caution in response to a more volatile economic environment. In terms of investment, the forecast predicts that overall investment growth will accelerate as further interest rate cuts reduce the burden on business investment.
UK Equities: Attractive Investment Opportunity
Nannette Hechler-Fayd’herbe, Chief Information Officer in Europe, the Middle East, and Africa at Lombard Odier, a Swiss private bank specializing in wealth and asset management, in an interview on Bloomberg, shared her perspectives on the current investment landscape, emphasizing the importance of spreading investment risk more broadly across multi-asset portfolios. Hechler-Fayd’herbe expresses her affinity for UK equities, citing their attractive valuations and sector composition.
She notes that UK equities are trading at forward price-to-earnings ratios similar to those of emerging markets, making them an appealing investment opportunity. The UK equity index, in particular, offers a favorable exposure to the energy sector, which is poised to benefit from a better-than-expected global economy. Additionally, in the event of geopolitical escalation, the energy sector is likely to benefit from higher prices, making it an attractive hedge.
Hechler-Fayd’herbe highlights the sector composition of the UK equity market as a key factor in its appeal. The market’s exposure to the energy sector, combined with its relatively lower volatility and higher dividend yields compared to European equities, makes it an attractive investment opportunity. She also notes that the UK equity market’s dividend yield is more attractive compared to European equities, providing a more stable source of income for investors.
Hechler-Fayd’herbe believes that the Bank of England’s interest rate cuts would potentially lead to a rally in UK equities. Overall, Hechler-Fayd’herbe’s comments suggest that UK equities offer an attractive combination of value, income, and sector composition, making them a compelling investment opportunity in the current market environment. With that in context let’s take a look at the 8 high growth UK stocks to invest in.
Our Methodology
To compile our list of the 8 high-growth UK stocks to invest in, we used the Finviz and Yahoo stock screeners to find the 60 largest companies in the UK. We then narrowed our choices to 8 stocks with the highest 5-year revenue growth. We also included their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in ascending order of their of their revenue growth.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 High Growth UK Stocks to Invest In
8. Astrazeneca (NASDAQ:AZN)
5-Year Revenue CAGR: 16.32%
No of Hedge Funds: 49
AstraZeneca (NASDAQ:AZN) is one of the top ten largest pharmaceutical companies in the world, the company’s products are sold in more than 125 countries. AstraZeneca (NASDAQ:AZN) is a leader in oncology, cardiovascular, renal, and metabolic diseases, respiratory and immunology, along with other general diseases. The company is also becoming a key player in the cancer therapeutics market.
AstraZeneca (NASDAQ:AZN) has a strong growth prospect driven by its innovative pipeline and increasing demand for its existing products. The company’s oncology therapy area is a key growth driver, with Tagrisso, Imfinzi, and Calquence all contributing to revenue growth. The company’s cardiovascular, renal, and metabolism (CVRM) therapy area is also growing strongly, driven by rapid Farxiga volume growth and continued sales of Symbicort. The company’s rare disease therapy area is also showing promise, with Ultomiris and Soliris driving revenue growth.
In Q2, AstraZeneca (NASDAQ:AZN) reported strong earnings, with total revenue growing by 13.3% year-over-year to $12.9 billion, beating analyst consensus by $410 million. The company’s oncology area was a key driver of growth, with revenue increasing by 15% year-over-year to $5.3 billion. The company’s balance sheet remains strong, with a net debt-to-adjusted EBITDA ratio of 1.8 and an A+ credit rating from S&P.
AstraZeneca’s (NASDAQ:AZN) growth prospects remain promising, the company has over 25 innovative products expected to be launched by 2030. The company’s pipeline is robust, with 189 projects currently in development. The company is expected to report an almost 29% increase in earnings for the current year. Industry analysts have reached a consensus on the stock’s Buy rating, with an average target price of $91.03 that suggests a 15.23% upside potential from its current levels.
7. Burford Capital (NYSE:BUR)
5-Year Revenue CAGR: 18.02%
No of Hedge Funds: 25
Burford Capital (NYSE:BUR) is a global finance and asset management firm that provides litigation finance services. The company’s business model is built on providing capital to companies involved in legal battles in exchange for a share of the potential proceeds if the case is won.
Burford Capital’s (NYSE:BUR) track record is impressive, with a consistent history of delivering high returns on invested capital. According to its annual report, the company’s Internal rate of return (IRR) and Return on invested capital (ROIC) are 27% and 82%, respectively as of December 31, 2023. The company’s ability to settle cases quickly and realize returns has contributed to its high IRR, while its strong balance sheet and diversified legal portfolio have enabled it to maintain a high ROIC.
Burford Capital’s (NYSE:BUR) strong reputation is a significant competitive advantage, allowing the company to attract high-quality talent and access high-value cases. The company’s focus on serving justice while generating profits is also likely to boost its reputation in the media, society, and the general public. As the company continues to deliver successful outcomes for its clients, its reputation will only continue to grow, creating a positive feedback loop that will drive future growth and success.
Looking ahead, Burford Capital (NYSE:BUR) is well-positioned to capitalize on the growing demand for litigation finance. The number of commercial disputes is on the rise, with 74% of senior in-house lawyers expecting an increase in the volume of disputes over the next two years. The company’s management is optimistic about its prospects, stating that they have reached the point of financial capacity and maturity to “swing for the fences” and take on higher-risk cases with potentially higher returns. This approach is likely to further enhance the company’s reputation as a leader in the litigation finance industry and attract more clients seeking to monetize their legal claims. Industry analysts are bullish on the company’s stock price and have a consensus Buy rating at a target price of $19.70, which implies a 37.70% increase from its current level.
6. Torm (NASDAQ:TRMD)
5-Year Revenue CAGR: 19.72%
No of Hedge Funds: 21
Torm (NASDAQ:TRMD) is a global shipping company that specializes in the transportation of refined oil products, such as gasoline, diesel, and jet fuel. The company is one of the key players in the industry and operates a fleet of approximately 90 modern vessels, which are chartered by oil companies, refiners, and trading firms.
According to a report by Business Research Company, the crude oil carrier market is valued at $201.54 billion in 2024 and is projected to grow to $233.32 billion by 2028, with a compound annual growth rate (CAGR) of 3.7%. Torm’s (NASDAQ:TRMD) growth prospects are driven by increasing demand for oil and a growing tanker fleet. The company has been investing in new ships and has a strong track record of delivering high returns on investment. The tanker industry is cyclical, but the company’s management is optimistic about the company’s prospects, and the company is well-positioned to continue growing in the future.
The company’s valuation is also attractive, with a price-to-earnings (P/E) ratio of 4.41, which represents a 64.26% discount compared to the sector median of 12.33. Industry analysts are bullish on the company’s stock price and have a consensus Buy rating at a target price of $44.60, which implies a 35.48% increase from its current level.
5. Endava (NYSE:DAVA)
5-Year Revenue CAGR: 20.80%
No of Hedge Funds: 16
Endava (NYSE:DAVA) is a technology services firm that specializes in IT services, including custom application development. The company also offers IT consulting, software development, and automation services to clients in finance, healthcare, and telecommunications.
In June, Endava (NYSE:DAVA) announced an expansion of its partnership with Google Cloud in the Asia Pacific (APAC) region. This collaboration aims to deliver and implement Google Cloud’s services, such as Generative AI, Cloud Migration, and Application Modernisation. By offering customers access to highly skilled software and data engineers, along with top-notch customer service, the partnership will provide tailored products and services across Google Cloud’s product suite. This expansion marks a significant step in Endava’s continued growth in Australia, New Zealand, and Southeast Asia, reinforcing its commitment to technical excellence in the region.
Endava (NYSE:DAVA) has a strong emphasis on custom application development, a high-growth sector in the IT services industry. With a consensus Buy rating from industry analysts, the stock has a target price of $37.30, which represents a 38.87% upside potential from its current level.
4. Clarivate (NYSE:CLVT)
5-Year Revenue CAGR: 21.96%
No of Hedge Funds: 27
Clarivate (NYSE:CLVT) is a leading global provider of information and analytics services, serving the research and intellectual property sectors. The company was formed in 2016 from the merger of Thomson Reuters’ Intellectual Property & Science and Financial & Risk businesses.
On September 23, Clarivate (NYSE:CLVT) announced a strategic partnership with Relatable Healthcare to launch a Product Relationship Management (PRM) platform for MedTech companies. This platform integrates the company’s competitive intelligence with Relatable’s software to offer a centralized source of product information, enhancing revenue growth and efficiency for MedTech manufacturers and distributors by providing access to detailed product data, cross-references, inventory, and sales materials.
Clarivate (NYSE:CLVT) emphasizes subscription-based services, which provide consistent revenue streams and strengthen its position in the data-driven services industry. In Q2, the company’s Academic and Government (A&G) segment demonstrated solid organic growth, with subscription revenues rising by over 3% and a renewal rate exceeding 96%. The Intellectual Property segment also showed improvement, with organic growth increasing by 270 basis points, indicating stabilization in trademark search volumes.
Clarivate (NYSE:CLVT) is trading 9.15 times its forward-year earnings, which represents a 55.47% discount to the sector median of 20.55. Industry analysts are bullish on the company’s stock price and have a consensus Buy rating at a target price of $7.61, which implies a 12.12% increase from its current level.
3. Autolus Therapeutics (NASDAQ:AUTL)
5-Year Revenue CAGR: 29.30%
No of Hedge Funds: 24
Autolus Therapeutics (NASDAQ:AUTL) is a clinical-stage biopharmaceutical company that specializes in developing T-cell therapies for the treatment of cancer. Autolus Therapeutics (NASDAQ:AUTL) proprietary technology platform engineers T-cells to specifically target and destroy cancer cells, offering a highly personalized approach to cancer treatment.
Autolus Therapeutics’ (NASDAQ:AUTL) obe-cel, an autologous cell therapy for a type of blood and bone marrow cancer, has shown impressive results in clinical trials, with an objective response rate (ORR) of 78% in patients with r/r B-ALL, compared to an ORR of 65% for Tecartus, a competing therapy developed by Gilead Sciences. Additionally, obe-cel has demonstrated a favorable safety profile, with only 3% of patients experiencing grade 3 or higher cytokine release syndrome and 7% experiencing grade 3 or higher ICANS.
The market opportunity for obe-cel is significant, with an estimated 8,000 new cases of adults diagnosed globally each year. Autolus Therapeutics (NASDAQ:AUTL) anticipates that the addressable market for obe-cel will be approximately 3,000 patients, which translates to a market opportunity of around $1.5 billion.
One of the key advantages of obe-cel is its differentiated mechanism of action, which allows for a shorter half-life and less toxicity compared to other cancer cell therapies. Additionally, obe-cel is administered as two infusions using a tumor burden-guided dosing schedule, which could make it more appealing to patients and physicians. With a potential price point of around $450,000, obe-cel could be competitive with other cancer cell therapies on the market.
Autolus Therapeutics (NASDAQ:AUTL) is also exploring the use of obe-cel in autoimmune diseases, including systemic lupus erythematosus (SLE), another chronic autoimmune disease. The company has promised data from a study on SLE patients before the end of this year, which could provide additional insight for growth.
Autolus Therapeutics (NASDAQ:AUTL) has also established partnerships with three major pharmaceutical companies, including BioNTech, Moderna, and Bristol Myers Squibb, which could provide additional opportunities for growth and revenue.
Autolus Therapeutics’ (NASDAQ:AUTL) obe-cel has the potential to become a best-in-class cell therapy for the treatment of cancers. Industry analysts have a consensus Buy rating on the stock, with a target price of $10.40, indicating a potential gain of 86.10% from its current price.
2. Bicycle Therapeutics (NASDAQ:BCYC)
5-Year Revenue CAGR: 30.21%
No of Hedge Funds: 30
Bicycle Therapeutics (NASDAQ:BCYC) is a clinical-stage biopharmaceutical company pioneering a new class of medicines based on its proprietary bicyclic peptide technology. The company’s therapeutic molecules called “bicycles” are smaller, more stable, and cheaper to produce than monoclonal antibodies, which are laboratory-produced protein that acts like an antibody in the body’s immune system and are used for the diagnosis and treatment of many diseases, including some types of cancer.
Bicycle Therapeutics’ (NASDAQ:BCYC) core technology is based on the discovery of “bicycles” which are small peptides that can be used to target specific molecules in the body. These peptides are designed to be more stable and have a higher affinity for their targets than traditional monoclonal antibodies.
Bicycle Therapeutics’ (NASDAQ:BCYC) pipeline includes several promising molecules in various stages of development. The company’s lead internal program is BT8009, a bicycle toxin conjugate (BTC) molecule that targets tumors overexpressing Nectin-4. BT8009 is currently in a phase 1/2 trial and a phase 2/3 registrational trial. The company’s second candidate is BT5528, which targets high EphA2-expressing tumors and is in phase 1/2 development. The third clinical-stage internal program is BT7480, another Nectin-4/CD137 dual-targeting molecule in phase 1/2 trials.
BT8009 has shown promising efficacy data in an ongoing phase 1/2 trial in heavily pre-treated patients with metastatic urothelial cancer. The molecule demonstrated a 38% objective response rate (ORR) among 26 patients receiving a 5 mg/m² weekly dose. The median duration of response was 11.1 months in 10 patients, with five still undergoing therapy. BT8009 also showed promising early results in other cancers, such as ovarian, triple-negative breast, and non-small cell lung cancer.
BT5528 is another BTC molecule that targets EphA2, a receptor tyrosine kinase overexpressed in difficult-to-treat tumors. BT5528 has shown promising efficacy data in patients with metastatic urothelial cancer, achieving a 39% objective response rate (ORR) among 18 patients who received doses of 6.5 mg/m², 8.5 mg/m², or 10 mg/m² every other week. The median duration of response was four months among seven patients.
Bicycle Therapeutics (NASDAQ:BCYC) has over 344 patents and 567 patent applications in various jurisdictions. Their patent portfolio consists of novel scaffolds and linkers, platform technology, bicyclic peptides, and related conjugates. Bicycle Therapeutics (NASDAQ:BCYC) is an attractive company due to its promising pipeline, and extensive portfolio. The company’s technology has shown differentiated safety profiles and efficacy data in various cancers. With a consensus Buy rating from industry analysts, the stock has a target price of $39.27, which represents a 38.97% upside potential from its current level.
1. Roivant Sciences (NASDAQ:ROIV)
5-Year Revenue CAGR: 121.82%
No of Hedge Funds: 62
Roivant Sciences (NASDAQ:ROIV) is a biopharmaceutical company that focuses on rapidly developing innovative therapies through its unique “Vant” model. This model involves creating or acquiring subsidiary companies focused on specific disease areas or technology platforms. Roivant Sciences (NASDAQ:ROIV) aims to accelerate drug development while reducing the time and cost of bringing new therapies to market.
Roivant Sciences (NASDAQ:ROIV) has a broad pipeline of drugs across various therapeutic areas, including neurology, oncology, and dermatology. The company has established itself as a key player in the biotech sector through its innovative approach and strategic partnerships.
On September 18, Roivant Sciences (NASDAQ:ROIV) announced the sale of its subsidiary, Dermavant Sciences, to Organon & Co. for $1.2 billion. The deal includes the company’s flagship product, VTAMA cream, which is FDA-approved for plaque psoriasis, a common skin condition, and is currently under review for atopic dermatitis, a chronic skin condition. This acquisition is a strategic win-win for both companies, as it enhances Organon’s dermatology portfolio and allows Roivant Sciences (NASDAQ:ROIV) to monetize quickly through sales and retaining potential payments and royalties.
The deal includes an upfront payment of $175 million, a $75 million payment upon regulatory approval for atopic dermatitis, and fees of up to $950 million when achieving specific commercial milestones. Additionally, Roivant Sciences (NASDAQ:ROIV) will receive tiered royalties on net sales.
Roivant Sciences’ (NASDAQ:ROIV) pipeline is promising, with several valuable assets, including Immunovant, Brepocitinib, Genevant Sciences, and Namilumab. Industry analysts have reached a consensus on the stock’s Buy rating, with an average target price of $17.06 that suggests a 35.63% upside potential from its current levels.
While we acknowledge the potential of Roivant Sciences (NASDAQ:ROIV) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ROIV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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