Image: Dechra Pharmaceuticals
for me, Cambridge Cognition Holdings (LSE:COG) and Burberry (LSE:BRBY) look like strong high-growth stocks for my portfolio. These are two very different companies, but I think both would help my portfolio grow. I’ve added these firms to my watchlist and will be buying in May or sooner.
Cambridge Cognition Holdings
The Cambridge-based neuroscience firm makes specialist software to help design clinical trials. It also has computerized cognitive assessment platforms that are used by hospitals in 100 countries, as well as by pharma giant Pfizer.
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Yesterday, Cambridge Cognition delivered strong results for the year ended 31 December 2021, with revenue growth of 50% and a record sales order intake for the second year running. Gross profit was up 49% to £8.1m for 2021 from £5.4m in 2020.
Its return to profit was driven by a record number of clinical-trial contracts. Sales rose by half to £10.1m. Singer Capital Markets has projected that this will continue, tipping sales to rise 25% by next year.
The firm is also rolling out new products, which have the capacity to drive further growth. NeuroVocalix allows brain cognition to be assessed from voice markers without the need of expensive human experts.
The stock had pretty much gone under the radar until it was mentioned in The Times at the beginning of the month. Its share price has since jumped 25%. There are definitely risks when investing in smaller companies. Cambridge Cognition has a market cap of just £50m. But with strong forecasts, I think this stock will continue to grow. It’s also in a sector that can prove very lucrative.
Global inflation issues, lockdowns in China and the closing of Russian operations, have all weighed on the Burberry share price in recent weeks. This compounded a fall set off by CEO Marco Gobbetti’s surprise decision to resign last autumn.
Despite this, I think the prospects for this high-end fashion giant remain positive. My thoughts were supported by today’s news that luxury goods conglomerate LVMH had reported strong quarterly growth. Clearly, luxury is still in high demand.
Despite inflationary pressure and economic concerns, I’d suggest that Burberry customers are fairly immune to such issues. I’d go as far to say that demand for Burberry’s products is rather demand-inelastic.
Today Burberry is trading at £15.95, down from a high of £22.67 last year. That’s quite a fall, especially considering that the brand hasn’t raised concerns about its ongoing performance. In fact, it’s been quite the opposite. In January the firm boosted its profit guidance and highlighted growth areas, including record earnings via social media platform Instagram.
Naturally, every stock has its risks. China is one of Burberry’s largest markets and Chinese customers have been known to turn against brands. Equally, the brand’s management will be hoping the current lockdowns don’t carry on too long.
However, I’m bullish on Burberry and will be adding it to my portfolio.