The Pinterest (NYSE: PINS) share price is now trading below its initial public offering price. Once an $85 stock, it now exchanges hands at less than $20 per share. So, here’s why I’ve opted to buy its shares despite the monumental drop.

Money doesn’t always talk

Pinterest stock and its earnings seem to have an inverse correlation. While earnings and average revenue per user (ARPU) continue to grow on a year on year basis, its stock continues to plummet to new one-year-lows.

Despite the increase in ad spend, the majority of analysts seem to misunderstand the tech firm’s business model. The focus seems to be pinned on monthly active users because Pinterest is seen as a social media platform. When viewed as such, a declining number of monthly active users (MAU) doesn’t bode well for the stock. Nonetheless, management stated in its Q1 results that this decline seems to be bottoming out, and expects MAUs to grow again later this year.

That being said, Pinterest is more than just a social media company that generates revenue from users scrolling through its platform. It’s an e-commerce platform with a social media front. The business generates revenue from engagement. This means that advertisers only pay when users engage with promoted pins. As most of these have indirect promotions of products in a pin, Pinterest is essentially selling products through a creative manner.

‘Pinning’ users down

Given that the NYSE-listed firm struggles with pinning users down, a number of acquisitions and partnerships have recently been made. This is an effort to bring better proposition to both advertisers and users.

For one, the company recently acquired Vochi, a video creation and editing app. Additionally, it partnered with Tastemade on a multi-million dollar deal. I can see how these developments will allow creators to create better video content and consequently, bring more users and revenue to Pinterest.

The firm also recently acquired The Yes, an AI-powered shopping platform. It uses an algorithm to find the right products that are personalised for a user’s taste and style. This acquisition aligns with much of what Pinterest is trying to achieve in the e-commerce space, given its recent introduction of Your Shop. Its key partnership with Shopify has paid dividends as well. I expect its top line to increase as it continues to roll out seamless checkout to more merchants.

Discount season

Nevertheless, Pinterest faces economic headwinds. A slowdown in the US economy, where it gets the majority of its revenue from, is expected. This could hinder growth in the short to medium-term. However, this isn’t a huge concern for me, as I plan to buy and hold Pinterest stock for the long term.

With a flawless balance sheet, a mountain of cash at $2.7bn, and zero debt, I’m confident that Pinterest can weather a potential economic slowdown. Not to mention its 12.5% profit margin shows that it’s got substantive earnings power. Moreover, its recent acquisitions and partnerships lead me to believe that Pinterest is finally doing a better job of marketing itself to potential users. As such, I see a further drop in its share price as a buying opportunity for me for Pinterest stock.

The post I bought Pinterest stock and here’s why appeared first on The Twelfth Magpie.

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John Choong owns shares of Pinterest at the time of writing. The Motley Fool UK has recommended Pinterest and Shopify. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Bearish trajectory

I think there are two main reasons why the Boohoo share price is falling. Firstly, the company has seen a number of allegations about underpayment of workers in its supply chain. In December 2020, the Guardian reported that in a Pakistani factory, workers were paid just 29p an hour to manufacture Boohoo garments. Similar cases have plagued Boohoo throughout 2021.

In addition to this, the company is fighting a £100m lawsuit over misleading advertising. I think the constant ESG battles Boohoo seems to face is beginning to turn investors sour. Unless it can begin to solve these issues, I think the Boohoo share price has further to fall in the future.

Secondly, the spike in growth for 2020 seems to have slowed throughout 2021. I would expect this to be the case, as pandemic restrictions ease and people spend more time in physical stores rather than shopping online. Boohoo reported a 40% rise in revenues for 2020. However, the growth forecast for 2021 is 25%. I think this is another reason the Boohoo share price has been falling in recent months.

Reasons to be optimistic

That being said, there are a number of reasons why I think the Boohoo share price could rise in the near future. The company’s net cash position looks healthy at just under £200m, which is encouraging, considering its recent acquisitions that have included Karen Miller, Oasis, Debenhams, and Dorothy Perkins. These acquisitions also help Boohoo add vital market share, which will help ward off competition and increase revenues.

Despite this, the group’s margins have stayed strong. Revenues rose from £195m in 2016 to £1.4bn in 2020. Over the same five years, profits rose from £15m to £91m representing margins of just under 10% in both years. This shows me the firm can stay consistently profitable, even while massively scaling up operations. This fact, coupled with the recent acquisitions, gives me confidence for the future of the share price.

Boohoo share price: The verdict

If Boohoo can get some of its ESG problems in check, I think the group has a bright future ahead of it. The current P/E ratio of Boohoo is 29.5, which is over half its five-year average. Therefore, I think the current Boohoo share price offers some good value.

For me, the fact that margins have stayed in check despite the ambitious expansion, is the most encouraging factor. This coupled with a historically lower valuation makes me think Boohoo could be one of the hottest UK retail stocks to add to my portfolio today.

The post The Boohoo share price is falling. Should I buy now? appeared first on The Twelfth Magpie.

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Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Good results

Amazon released its Q2 results on 29 July. As expected, these results contained some encouraging numbers. Operating income, net sales, and operating cash flow saw increases of 24%, 27%, and 16% respectively. So why did the Amazon shares tumble over 8% the same day? The reason for this, as my fellow Fool Charlie Keough pointed out, was the somewhat disappointing Q3 projections. Projected growth for Q3 was estimated to reach the $106bn-$112bn range, falling short of the original $119bn projections. This fall is likely due to the reopening of economies leading to less online shopping.

Although the share price dipped, it is important to note that these results still show growth. If Amazon continues this impressive growth moving forward, I expect the share price to rise accordingly.

Diversified business

Amazon boasts a heavily diversified portfolio of services and subsidiaries besides its traditional e-commerce business. Two notable mentions include Amazon Web Services (AWS) and Amazon Entertainment.

For example, Amazon Prime Video turned over a $108.5bn revenue in Q1 of 2021, reporting streaming hours had increased by 70% comparative 2020 Q1. This is a great example of how the firm benefited from the pandemic and why Amazon shares skyrocketed as a consequence. With the pandemic threat still lurking, it is businesses such as Prime Video that will continue to drive revenue higher for Amazon.

In addition to this, AWS has been gaining significant customer momentum and is currently the fastest-growing part of Amazon’s business. AWS has been selected as exclusive cloud software by a number of industry giants across multiple markets. These include Ferrari, BMO Financial Group, Swisscom, and the National Hockey League. This cross-industry presence is reflective of Amazon’s dominance in its field, and I don’t expect this to be challenged anytime soon.

Risks to Amazon shares

The one issue that Amazon could face moving forward is slowing growth. The rapid growth experienced in 2020 isn’t likely to be experienced again, and as increased competition arises, Amazon’s market share could dwindle. That being said, this is a longer-term factor but is still worth keeping in mind.

In addition to this, Amazon currently has a beta of 1.32. This means Amazon shares tend to move at a higher magnitude than the wider equity market. This exposes investors to much larger market risk.

I think that moving forward we will see equity markets push higher, and Amazon shares will directly benefit from this. Its broad business portfolio is great for increasing revenues but may face competition in the long term. Anyhow, I would add Amazon shares to my portfolio today.

The post Is now the right time to buy Amazon shares? appeared first on The Twelfth Magpie.

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Dylan Hood has no position in any shares mentioned above. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended the following options: long December 2021 $130 calls on Ferrari, long January 2022 $1,920 calls on Amazon, and short January 2022 $1,940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Q2 results

My colleague Edward Sheldon posed a similar question back in May after Amazon’s solid Q1 results, and there were also many positives to take away from Amazon’s latest results. Net sales increased by nearly 30%, to $113bn. Further, net income increased by just over $2bn, while operating income increased by over 30%.

If Amazon’s results saw an increase in many aspects, then why did the share price fall? Well, although this seems solid, certain figures fell short of both analysts’ expectations as well as Q2 2020 performance. For example, net sales rose 41% in Q2 of last year. To add to this, the outlook for Q3 of this year also dampened investor’s confidence. The company stated an estimate of between a 10% and 16% ($106bn-$112bn) growth rate for Q3 sales, somewhat below the $119bn estimates. This, I suspect, was a significant reason in the Amazon share price dip. With all said, the above figures still represent growth. At a time when many parts of the world are beginning to reopen, I think a fall in sales could be expected as people begin to revert to physical stores.

Amazon positives

However, I think Amazon at the current price provides many opportunities. Firstly, the business continues to diversify. For example, Amazon Web Services (AWS) is expanding. AWS is a subsidiary of Amazon, offering cloud platforms to companies and governments. The Q2 results highlighted an array of large firms that have opted to use AWS as their official cloud provider. As they continue to grow, innovations like this could lead to a surge in the future Amazon share price.

To add to this, global e-commerce sales are predicted to continue growing. In the US alone they are expected to top $1trn in 2022. With Amazon being a spearhead in e-commerce, a boost in sales would no doubt lead to a rise in the Amazon share price.

The company is also constantly looking at ways to improve performance. In the UK, it announced plans to create 10,000 new corporate and operations jobs, while also investing £10m over three years to train 5,000 employees. This, long-term, could have very positive effects for Amazon.

Should I buy?

For me, the fact many people were sceptic about a 27% growth in net sales shows the strength of Amazon. The firm is placed in a market that has grown massively during the pandemic, and I can only see it continuing to do so. Although some were dubious about the founder and former CEO, Jeff Bezos, announcing his plans to step aside from the company, I believe this does not pose an issue. I think this dip in the Amazon share price presents a great opportunity, and as such now I would deem a good time for me to buy.

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Charlie Keough owns no shares of Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

What is Jumia Technologies?

Tagged the ‘Amazon of Africa’ Jumia is a Nigeria-based e-commerce company. With over 40m listed products, the firm sells to an enormous African market of over 1.2bn consumers. The firm’s business model consists of four parts: JumiaPay, Jumia Marketplace, Jumia Travel, and Jumia Food. Having such an extensive portfolio of products is one of the things I like about it.

The African e-commerce market has seen an explosion in growth during the last five years as more and more countries are expanding internet capabilities. Analysts have projected e-commerce could be worth $75bn in leading African economies by 2025. Jumia seems to be harnessing this momentum, reporting a 50% rise in transactions during the first six months of 2020. Its stock price is likely to directly benefit from the increasing e-commerce presence in Africa. 

Still no profit

One problem that has haunted Jumia since its 2019 IPO is its losses. In its 2021 Q1 results, the firm announced operating losses of $41m. These are largely reflective of its ongoing infrastructure building to keep up with a growing consumer base. This gives the firm a temporary excuse for excessive losses. However, as a nine-year-old company, I would hope this investment would lead to some profits in the next few years.

In addition to this, there are still problems with the lack of internet infrastructure in much of sub-Saharan Africa. The International Telecommunication Union estimates that just 28.2% of individuals use the internet there. This could severely curtail Jumia’s capabilities as well as its stock price.

Future prospects for Jumia Stock

Alphabet‘s Google is one big-hitter that’s looking to capitalise on Africa’s extensive population growth. Through its Loon and Taara projects, the business is developing super-fast internet speeds through invisible light beams transmitted at high altitudes. Google has picked Africa as a target for this project and operations are already kicking off in Kenya. Facebook has announced a similar project to connect 23 countries in Africa and the Middle East to Europe via a 37,000km long undersea cable.

Projects like these will massively increase Jumia’s reach, and will no doubt add millions of new customers to the internet-based business plan.

Jumia: a buy now?

I like the current price of Jumia stock. Though it has taken a drastic tumble from its February highs, I believe this marks a good value buy opportunity. While there are certainly some short-term profitability hurdles that need to be overcome, I own Jumia shares as I believe it’s in a position to capitalise on the rapidly growing African market.

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Dylan Hood owns shares of Jumia Technologies. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK owns shares of and has recommended Amazon and Facebook and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

For investors, this extraordinary industry growth is creating many lucrative opportunities. With that in mind, here’s a look at my top UK e-commerce stocks for 2021 and beyond.

UK e-commerce stocks: online retailers

Let’s start with e-tailers. In this sub-sector of the online shopping market, my preferred plays are fashion retailers ASOS and Boohoo. These are pureplay online retailers. In other words, they’ve no physical stores.

Both of these businesses are growing at a rapid rate. ASOS, for example, has registered five-year annualised sales growth of 23%. Boohoo has done even better, generating five-year annualised revenue growth of about 55%. Going forward, both companies look set for continued growth. That said, e-commerce is a competitive industry and these companies face intense competition from the likes of Zalando and Amazon.

Another UK online retailer I think is worth mentioning here is Ocado. It’s the leader in the grocery market. It’s growing at a fast pace but losing money currently due to the investments it’s making in its warehouse automation division.

There are also some companies that generate a proportion of their sales online such as JD Sports Fashion. I think JD is well-placed to benefit from the ‘casualisation’ trend and the increasing demand for premium athletic footwear. Like ASOS and Boohoo though, it faces plenty of competition.

Warehouse stocks

Another area of the e-commerce value chain that can provide investors with opportunities is warehousing and logistics.

My preferred plays here are Tritax Big Box REIT, Urban Logistics, and Clipper Logistics. Tritax and Urban Logistics provide crucial warehousing services to retailers such as Amazon and delivery companies such as DHL. Clipper, meanwhile, provides a range of services to retailers including warehousing, delivery, and returns management. Two other companies worth a mention are Segro and Warehouse REIT, which both manage warehouses.

All of these companies look well-positioned to benefit from the growth of e-commerce, in my view. However, they do face risks. In economic downturns, warehousing companies cannot always collect all their rent.

Packaging stocks

Packaging companies are also worth checking out when looking at e-commerce stocks. After all, nearly everything we buy online comes in some form of cardboard box or plastic packaging.

My preferred play here is DS Smith. It’s a packaging powerhouse with a focus on sustainable packaging. Three other UK companies in this space worth a mention are Mondi, Smurfit Kappa, and Macfarlane.

I’ll point out that packaging is quite cyclical. These companies can suffer during economic contractions.

Online shopping stocks: I’m investing globally

It’s worth noting that many of the most dominant e-commerce stocks are listed overseas. For example, companies such as Amazon, Shopify, and eBay are all listed in the US.

The US also has plenty of payments companies such as Mastercard, Visa, and PayPal, which are all benefiting from the growth of e-commerce too.

I personally own both UK and US e-commerce stocks in my portfolio. I figure that this is the best approach to get broad, diversified exposure to this high-growth industry.

The post UK e-commerce stocks: here are some of my top picks for 2021 appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in ASOS, Boohoo, JD Sports Fashion, Tritax Big Box, Clipper Logistics, DS Smith, Mondi, Amazon, Shopify, Mastercard, and PayPal. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Mastercard, PayPal Holdings, Shopify, and Visa. The Motley Fool UK has recommended ASOS, boohoo group, Clipper Logistics, DS Smith, eBay, Tritax Big Box REIT, and Warehouse REIT and recommends the following options: long January 2022 $1920 calls on Amazon, short June 2021 $65 calls on eBay, short January 2022 $1940 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, a rise in US bond yields has caused a large-scale tech stock sell-off. Rising yields are a key indicator of inflation, which erodes the future value of company earnings.

Though this may cause concern for investors, I’m taking advantage of cheaper share prices to top up on three US tech stocks I already hold.

#1. Palantir Technologies: data analytics

Palantir Technologies (NYSE: PLTR) specialises in data gathering and analytics. Its share price peaked at $39 in January 2021, up from $9 in October 2020.

The company offers three different data services, Gotham for governments, Foundry for corporate firms, and Apollo, which manages the two. Its Gotham government contracts provide a stable long-term income. In 2020 the company saw 47% revenue growth to $1.1bn, with 2021 forecasts expecting a similar figure.

However, the current price-to-book (P/B) ratio is around 28, signalling this stock could be overvalued. This is a risk for any investor buying now. For context US tech stock Microsoft trades on of P/B ratio of around 13. However, data collection is only going to accelerate in coming years, as the world increasingly shifts towards technological dependence. Therefore, I expect this stock to have a strong future and will buy more.

#2. NIO: Chinese electric travel

NIO (NYSE: NIO) is a Chinese electric car manufacturer. Its share price surged over 1,100% in 2020. Though the shares are down, this US-listed tech stock does boast some encouraging numbers. One example is the 113% year-on-year increase in production in 2020. It also has a much lower P/B ratio of 13.4, compared to industry leader Tesla’s 28.3. This indicates the current share price could be undervalued comparative to the industry giant.

However, if this US tech stock wants to become a front runner in the electric vehicle industry it will have to fend off some fierce competition, which is a risk that can’t be ignored. Ford has pledged $11bn for electric vehicle research from 2018-2022 and General Motors has set aside as even larger $27bn.

However, as a current investor I’m bullish about this US tech stock’s future growth. I’ll be buying more shares for my portfolio.

#3. Jumia Technologies: African e-commerce

Often referred to as “the Amazon of Africa”, Jumia Technologies (NYSE: JMIA) is a Nigerian e-commerce company. After its IPO in April 2019, this stock suffered some huge cash flow issues with operating losses exceeding revenues. However, throughout 2020 its share price exploded from just under $3, to peak at $65 per share in early February 2021.

With Africa’s lack of infrastructure, e-commerce has been largely overlooked as a viable business plan. Google owner Alphabet and Facebook are two US tech stocks that have announced plans to provide all of Sub-Saharan Africa with internet connections. If these projects are successful, I feel it would put Jumia in a great spot. Jumia’s conservative $4bn market cap also offers room for encouraging upside potential. I’m bullish about this US tech stock’s potential and, again, I’m going to add to my existing holding.

The post Why I’m buying these 3 US tech stocks today appeared first on The Twelfth Magpie.

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Dylan Hood owns shares in Jumia Technologies, Palantir Technologies, and NIO. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (A shares), Facebook, and NIO Inc. The Motley Fool UK owns shares of Palantir Technologies Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Today, over 1.8bn people worldwide e-shop with sales amounting to around $3.5trn. Yet with more and more people accessing the internet, and advances in technology making it easier to shop online, analysts are expecting global retail online sales to soar to a staggering $6.5trn by 2023.

Source: Statista

For investors, the growth of e-commerce is generating plenty of opportunities. With that in mind, here are three of my top UK e-commerce stocks to buy for 2020 and beyond.

ASOS

One e-commerce stock I’m quite bullish on is online fashion retailer ASOS (LSE: ASC). Its website asos.com offers a fantastic range of clothes as well as a seamless shopping experience for consumers. Over the last three years, revenue has climbed from £1.4bn to £2.7bn.

What I like about ASOS is that the company appears to have significant potential for international growth, particularly in the US. While UK sales came to nearly £1bn last year, US sales were just £341m. This leads me to believe that group sales could climb much higher in the years ahead as the company expands internationally. “We are well-positioned to take advantage of the global growth opportunity ahead of us,” said CEO Nick Beighton in the group’s most recent full-year results.

I’ll point out that ASOS shares rarely trade cheaply. Currently, the forward-looking P/E ratio is a high 57 (falling to 37 using the FY2021 EPS forecast). Personally, I’m ok with that valuation given the growth potential here, but be aware that it doesn’t leave a huge margin of safety.

Boohoo

Another online clothing retailer that I’m excited about is Boohoo (LSE: BOO). It owns the brands Boohoo, Pretty Little Thing, Nasty Gal, MissPap, Karen Millen, and Coast. Over the last three years, sales have climbed from £195m to £857m and looking ahead, the group is aiming to deliver revenue growth of 25% per year in the medium term.

Boohoo also appears to have strong growth prospects internationally. Helped by the group’s strong social media presence, international revenue has exploded higher in recent years. “We are well-positioned to disrupt, gain market share, and capitalise on what is a truly global opportunity,” said CEO John Lyttle earlier this year.

Like ASOS shares, Boohoo shares are not cheap. Currently, the forward-looking P/E is 58 (falling to 46 using the following year’s earnings estimate). That’s an expensive price tag, however, given the prolific growth here, I don’t think it’s that unreasonable.

Tritax Big Box

Finally, check out Tritax Big Box (LSE: BBOX). It’s a real estate company that owns a portfolio of strategically-located warehouses that are let out to retailers such as Amazon and Argos.

The reason I like BBOX as an e-commerce play is that the shift to online shopping is creating a very strong demand for warehouse space in the UK. Indeed, according to a recent report from property consultancy Lambert Smith Hampton, we are currently seeing “unprecedented demand for strategically-located logistics warehouse space across many parts of the country.” This is a good sign for companies that operate in this niche area as it means they can keep raising rents. 

Tritax shares currently trade on a forward-looking P/E ratio of 22 and offer a prospective dividend yield of 4.7%. At those metrics, I think the stock offers considerable value.

The post Want to invest in e-commerce? Here are 3 stocks I’d buy for 2020 and beyond appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in ASOS, Boohoo Group, and Tritax Big Box. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon and ASOS. The Motley Fool UK has recommended boohoo group and Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

But if this method is a bit too narrow for your tastes, an easier way to profit may be to invest in the property companies that own the warehouses that support package storage, sorting and shipping.

A history of success not to be ignored

This is one area where Hansteen Holdings (LSE: HSTN) shines with its portfolio of around 300 estates in the UK and a smattering in Belgium and France that support a respectable 3.9% dividend yield. The group focusses solely on industrial properties and has a wide variety of tenants that provide a very nice level of diversification, so not too much exposure to any one particular sector.

The group’s management team also has a very long track record of success and knowing when to enter and exit certain markets. The latest call made was to sell off the entirety of the group’s German and Dutch holdings for €1.28bn at a time when occupancy and rental rates were high and the weak pound made the transaction even more attractive in sterling terms.

The proceeds of this sale were used to retire a significant amount of debt, fund a relatively small acquisition and return a lot of cash to shareholders. That return was facilitated though a shareholder-friendly tender offer that repurchased and retired a whopping 50% of the group’s outstanding shares for a total of £580m.

The group is now concentrating on the UK market, where it still sees a solid medium-term outlook for the industrial property market as GDP growth continues despite recent wobbles in the housing market. And on top of GDP growth, fact that the group’s portfolio properties are concentrated on large estates close to major highways means it should continue to benefit hugely from the shift towards e-commerce.

An aptly named option

Another company operating in the same vein is newly public Warehouse REIT (LSE: WHR). The group raised £150m in its September IPO and has already invested a bit more than this in building a portfolio that stretches from the south coast of England to Glasgow.

Like Hansteen, Warehouse REIT’s portfolio is concentrated on industrial properties that are either situated in close proximity to vital infrastructure links or in urban areas themselves. The latter are part of the group’s plan to be a key part of the ‘last mile’ delivery networks for e-commerce firms.

And with relatively high demand and limited supply for suitable properties, Warehouse REIT is expecting to achieve very high occupancy rates and steadily rising rental rates going forward. It’s still a bit early to tell if this is working out as planned, but the group’s acquisitions so far have taken place on estates with low vacancy rates and very nice annual yields.

Warehouse REIT isn’t a screaming bargain as it trades at a 7% premium to its net asset value, but if domestic economic growth continues apace and shoppers begin buying ever greater amounts of goods online, the company looks well positioned to benefit hugely.

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Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended Hansteen Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Despite now being old enough to legally drink, online fast fashion retailer Asos (LSE: ASC) continues to grow at a clip that even many fledgling small-caps would be jealous of. In the six months to February, the company posted a stellar 37% year-on-year rise in revenue and with considerable expansion opportunities at home and abroad, I reckon this growth share has much more to give.

Even in the UK, where the company boosted the number of active customers by 16% year-on-year to 5m in H1, there is still plenty of room to bring in new customers since there are 16.4m young adults in the 15-34 age range that it targets. And expansion potential overseas is relatively boundless with just another 5m customers in Europe and around 2m each in the US and the rest of the world.

Turning itself into a globe-spanning e-commerce juggernaut requires very substantial, and expensive, logistics infrastructure. Thankfully, management is thinking long term and has spent heavily in the past few years in building out its delivery facilities across the world in anticipation of this growth. In H1 alone, capital expenditure nearly doubled from £31.9m to £62.4m.

Of course, in the short term this is a drag on margins. But this honestly doesn’t matter too much as the business is still solidly profitable, has a net cash position and is funding all expansion through cash generated from operations. With a proven business model, a previously proven ability to raise margins when necessary, and huge potential market across the globe Asos still has room to continue growing by double-digits for some time to come.

Risk-averse investors will likely be put off by the stock’s pricey valuation of 84 times forward earnings. But should the share price pull back, I’d definitely be very interested.

A bargain growth option?

A more reasonably priced growth share is digital marketing and public relations specialist Next Fifteen Communications (LSE: NFC). The company specialises in working with tech companies and despite posting earnings increases of 78%, 36% and 40% respectively in the past three years, its shares trade at a relatively cheap 16 times forward earnings.

As more and more marketing campaigns are built with online delivery at their core, rather than simply as an add-on to traditional print or television spots, NFC has proven itself a reliable partner to huge multinationals seeking expertise in online communications that many traditional ad and PR firms simply do not have.

This has led NFC to win contracts with just about every globe-spanning tech firm you can think of, as well as blue chips including GE, IBM and Vodafone. These new contracts are feeding through to the company’s financials and in the year to January it posted a 32% increase in revenue to £171m and a doubling of EBITDA to £29m.

Much of this growth has come through acquisitions, but organic growth was still a very respectable 10% in the period. And with just £11.4m in net debt at period-end, the company’s balance sheet provides plenty of firepower for future acquisitions.

With a reasonable valuation, a core product that is increasingly in demand, and fast growing margins, I believe NFC is worth a closer look for growth-hungry investors.

The post 2 super growth stocks with huge potential appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK owns shares of General Electric. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.