2 cheap growth stocks to consider for a Stocks and Shares ISA
Growth stocks are those that are growing (of course) but specifically those that are doing it faster than the average, whether that’s the overall market or rivals in a particular sector. As such, they generally trade at a higher value than others (sometimes riskily so).
However, not all shares do, which can present lucrative opportunities if the market has mispriced them. Here are two that I think are worth considering in June.
Ashtead Technology
In my opinion, AIM-listed Ashtead Technology‘s (LSE: AT.) worth a look at 450p. The £363m company rents out specialist subsea equipment for both the offshore renewables and oil and gas sectors.
The share price has halved over the past year, leaving it looking very cheap. Based on current forecasts for 2026, the stock’s trading at just 8.5 times forward earnings. That’s very cheap for a quality growth stock.
Indeed, it’s the sort of valuation where I’d expect an imminent decline in revenue or earnings. But Ashtead Technology’s growth trajectory still looks attractive.
| 2022 | 2023 | 2024 | 2025 (forecast) | 2026 (forecast) | |
|---|---|---|---|---|---|
| Revenue | £73m | £110m | £168m | £228m | £250m |
| Earnings per share (EPS) | 15.7p | 28.3p | 36.5p | 45.3p | 53.2p |
So what’s going on? Well, wind turbines is a growth market for the company, but investors have soured on renewables. Meanwhile, North Sea oil and gas producers are subject to a combined tax rate of up to 78%, including the Energy Profits Levy. This is crippling investment in the sector. So there are risks to consider here.
In reality though, there’s still a need for both types of energy, as well as nuclear. Ashtead Technology’s a global company and doesn’t rely solely on the UK for growth. As the firm points out: “Weâre not tied to any one geography or end marketâ.
Ashtead Technology’s also a serial acquirer, which does mean it could overpay for a company. However, with much of the European renewables and oil and gas sectors currently in the doldrums, it’s possible the firm may be able to add to its equipment rental fleet at attractive valuations.
Alphabet
The second cheap growth stock is Alphabet (NASDAQ: GOOG). The tech giant owns Google search, Google Cloud, YouTube, and robotaxi firm Waymo.
Since February, the share price has dropped 18%, putting the forward P/E ratio at just 18.5. For a world-class technology company, that’s bordering on dirt cheap.
One worry hanging over the stock right now is the rise of chatbots like Claude and ChatGPT, which are challenging traditional internet search engines.
It’s worth pointing out though that Google says its AI Overviews now has over 1.5bn monthly views and is driving more engagement. Importantly, it recently confirmed that this feature’s generating advertising revenue at a rate comparable to traditional search results.
Another risk is the ongoing anti-monopoly case against Google, which could ultimately lead to a breakup of the tech giant. Of course, we don’t know how this will play out.
But consider that YouTube’s the world’s second-largest search engine (after Google), with over 2.7bn monthly active users. Both ad revenue and subscriptions (YouTube Premium) are growing at 10%-plus.
If YouTube commanded a similar market value to Netflix, it would alone be worth over $500bn. That leaves the rest — search, Gmail, cloud, Waymo robotaxis, Google DeepMind (AI), cybersecurity, quantum computing, and more — worth around $1.5trn. Seen from this angle, the $2trn group looks undervalued to me.
I think Alphabet shares are worth considering for long-term investors at $170.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Foolâs board of directors. Ben McPoland has positions in Ashtead Technology Plc. The Motley Fool UK has recommended Alphabet and Ashtead Technology Plc. 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.
