UK and EU officials moving to scrap post Brexit red tape on food exports gives British businesses a cleaner pathway to grow across the Channel. That kind of clarity can help growth focused UK companies that already look financially sound and primed for faster earnings. This article highlights three stocks screened for strong profit expansion potential and solid balance sheets, so you can quickly spot ideas for your watchlist.
The three stocks highlighted here offer a compelling starting point if you want exposure to financially solid businesses with healthy high growth potential in earnings. However, if you want the pick of this theme, these 9 best high growth potential stocks are the best of the best.
Burberry Group (LSE:BRBY)
Overview:Burberry Group is a London based luxury fashion house selling apparel, accessories and bags, with growth focused on ecommerce led retail.
Operations:Burberry generates around £2.4b from Retail/Wholesale activities and £62 million from Licensing, with sizeable sales across Mainland China, the US, the UK and other regions.
Market Cap:£3.8b
Burberry Group fits the Healthy high growth potential theme through its focus on higher margin direct ecommerce and full price stores, particularly in Asia Pacific and China. Analysts highlight these areas as central to expectations for faster earnings over the next few years.
"The continued acceleration in e-commerce, including eight consecutive quarters of online growth and the rollout of AI-enabled clienteling tools, can increase direct-to-consumer revenue and support earnings through higher gross margins and operating efficiency."
The key question for Burberry Group now is how one unresolved pressure on profitability evolves as the growth plan runs harder.
That pressure point is exactly where the opportunity lives, and the full narrative for Burberry Group shows how Burberry Group could convert it into accelerating, higher quality earnings growth.
CMC Markets (LSE:CMCX)
Overview:CMC Markets runs online trading and investing platforms where individuals and institutions trade derivatives and shares, with earnings anchored in trading activity.
Operations:CMC Markets generates about £320 million from Trading and £70 million from Investing, with revenue spread across the UK, Australia and other regions.
Market Cap:£1.9b
CMC Markets plugs into the Healthy high growth potential theme through its Trading segment. Active short term derivatives and CFD use drives fee and spread income that analysts link to faster earnings over the next few years.
"Expansion of CMC Markets' institutional and B2B partnerships with Tier 1 banks and neobanks, including relationships with ANZ, Westpac, Revolut and ASB, is increasing wholesale and platform driven activity and can support higher net operating income and profit margins over time."
One key consideration is what happens if a planned ramp up in costs runs ahead of the expected uplift in trading driven income and margin expansion.
If that cost curve worries you, the full narrative for CMC Markets shows where CMC Markets' spending could potentially accelerate earnings power and support a re-rating of the stock.
Aviva (LSE:AV.)
Overview:Aviva is a London based insurer providing health cover, general insurance, retirement savings, and long term protection products across several markets.
Operations:Aviva generates about £14.1b from UK & Ireland General Insurance, £11.2b from Insurance, Wealth & Retirement, and £4.5b from Canada General Insurance.
Market Cap:£21.8b
Aviva brings the Healthy high growth potential theme into the everyday lives of customers through health focused insurance and protection products that sit alongside its wider general insurance and retirement offerings.
"Aviva's exposure to the UK's ageing population, persistent demand for retirement solutions, and growing assets in workplace pensions/wealth mean that the company stands to benefit structurally from increasing premium inflows and strong long-term growth in Assets Under Management (AUM) and fee income, driving future revenues and operating profit."
What happens when one unseen pressure on capital intensity and balance sheet funding costs collides with those long term health insurance ambitions.
That capital squeeze is exactly what the full narrative for Aviva unpacks, showing how Aviva could turn funding pressure into accelerating, fee rich earnings momentum.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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