What’s the best time to buy growth shares? Even after they’ve already climbed, they might still have a lot further to go — just ask any Amazon or Tesla shareholder.
But I’m always on the lookout for price drops, which I believe can often give us fresh buying opportunities. And they can be especially attractive if we can see a good reason why the price might start climbing again.
Shares in semiconductor materials specialist IQE (LSE: IQE) have fallen nearly 75% over the past five years. But that was largely due to a massive spike in 2017 that saw the shares rise to an unsustainable valuation.
The IQE share price has regained a little since its 2022 lows back in May. And I can’t help wondering if first-half results, due on 6 September, might provide the spark to set the fire going again.
The company describes itself as “the leading supplier of compound semiconductor wafer products and advanced material solutions to the global semiconductor industry“.
We’ve been suffering from a global chip shortage. And that means IQE should be well positioned as the industry ramps up again to support worldwide demand, right? Well, I hope so.
The big risk is that IQE is not currently profitable. But forecasts suggest that should change by 2024.
Back in fashion?
I’m hoping that interim results from boohoo.com (LSE: BOO) might give shareholders a bit of respite. They’re due on 28 September, so we have some weeks to wait yet. The boohoo share price, meanwhile, has crashed by 80% over the past 12 months.
Partly that’s down to shifting post-pandemic shopping habits. But the company has had a number of well-publicised problems of its own.
UK sales figures for the first quarter were flat, though US sales dropped by 28%. There’s a big hit from global infrastructure issues there. And it represents the loss of some early inroads into the American market that might be hard to regain.
The company expects adjusted EBITDA to be only just positive, and the City predicts a reported loss this year. So there’s financial risk, clearly. But forecasts suggest profit in 2023/24, with a P/E dropping as low as 11.5 by 2024/25.
My final pick is one that’s already started to climb back from 2022 falls. I’m talking about Scottish Mortgage Investment Trust (LSE: SMT), whose shares hit a low in June.
The trust invests in global technology stocks, and has Moderna, Tesla. and ASML among its biggest holdings.
When the US Nasdaq index crashed into a bear market in 2022, Scottish Mortgage shares went with it. Over the past couple of weeks, despite a recent recovery, they’ve followed the technology index back down again following its latest dip.
There are no updates due in September, so nothing there that might give the shares a boost. But if Nasdaq sentiment does improve further, might we see a bull run for the investment trust?
I’m speculating, and there’s plenty of risk with all three stocks here — especially, I think, the two earmarked for losses this year.
But for the long term, I rate all three as good value.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Alan Oscroft has positions in Scottish Mortgage Inv Trust and boohoo group. The Motley Fool UK has recommended ASML Holding, Amazon, Tesla, and 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.