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Looking for low-cost growth stocks to buy? Here are three I think investors need to pay close attention to.
Ramsdens
Pawnbrokers like Ramsdens (LSE:RFX) tend to thrive when citizens are feeling the pinch. This is one reason why City analysts think earnings at this particular operator will soar 31% in the current financial year (to September).
But tough economic conditions aren’t the only factor, with the company’s bottom line also being boosted by strong gold prices. Bullion’s hit repeated record highs over the last year, and is tipped by some for more substantial gains as macroeconomic and geopolitical concerns grow.
Based on current forecasts, Ramsdens shares — at 347.9p per share — trade on a forward price-to-earnings growth (PEG) ratio of 0.3. Any reading below one implies that a share is undervalued.
A potential gold price reversal is a major risk. But the subdued outlook for the British economy still makes Ramsdens worth a close look in my book.
Hochschild Mining
Hochschild Mining‘s (LSE:HOC) another UK share riding high thanks to the surge in precious metal prices. This business operates a string of gold and silver mines across The Americas.
Investors can purchase physical metal or a metal-tracking fund to profit from rising prices. However, buying a mining stock can also open the door to dividend income. This particular one has paid more than $100m out in dividends since 2016.
City analysts think Hochschild’s annual earnings will spike 85% in 2025. This leaves it on a forward price-to-earnings (P/E) ratio of 9.4 times.
Meanwhile, its PEG ratio for this year stands at 0.1.
Hochschild’s shares have fallen sharply recently due to rain-affected mine stoppages, to 276p. While environmental issues like this remain a constant risk, I think recent weakness represents an attractive dip-buying opportunity.
Not only am I confident that gold and silver will continue appreciating, but the FTSE 250 firm has a string of exciting exploration opportunities (including at its flagship Inmaculada mine) that could deliver long-term growth.
Allianz Technology Trust
At 403.5p per share, the Allianz Technology Trust (LSE:ATT) trades at an 11% discount to its net asset value (NAV) per share. Its cheapness reflects the cyclical nature of its holdings and the risk of underperformance if the world economy splutters.
Crushing trade tariffs and an oil price shock are a couple of potential threats to global growth.
Yet Allianz’s investment trust — which covers sectors like chipmaking, telecoms and software development — also has substantial long-term growth potential I don’t think’s reflected at current prices. The 46 companies it holds provide a diversified way to capitalise on numerous digital opportunities like cloud and quantum computing, autonomous vehicles, cybersecurity and artificial intelligence (AI).
This mix has already delivered a huge average annual return of 13.5% over the last five years. Major holdings here include the so-called Magnificent Seven tech stocks (like Nvidia and Apple) with the exceptional of volatile Tesla.
