Could these growth stocks replicate Fever-Tree?

We’ve all heard of Fever-Tree, the upmarket tonic brand taking the battle to Schweppes. Fever-Tree started in 2004 in the depths of South West London. Their focus was to create a premium tonic which could be perfectly matched with the ever-growing trend of craft gin. However, they didn’t expect to be the growth stock of the decade. Simply mentioning the name Fever-Tree will now generate an echo of groans from people that missed out on the small-cap opportunity. When they listed in late 2014, their share price was around 400p, and now it comfortably sits at 2,440.00p per share. High profit margins, a refreshed product, excellent marketing and a stagnated market made the perfect formula for this brand to flourish. But, is this a new trend to keep an eye out for? Are there other markets where the leading brands have gotten too comfortable? 

The first company on my list is estate agents Purple Bricks. Purple Bricks floated on the FTSE in 2015, and has since grown its share price quickly at over 300% since its inception. The company is an online estate agent, that uses it’s unique selling point of no commission in its effective marketing mantra. The company began in 2012 and entered a market dominated by big players, such as Rightmove, Zoopla and Countrywide. Despite stiff competition, the company currently has a larger market capitalisation than its rival Countrywide. It now has a revised target share price of 733p [currently 419p] and plans on further expansion into the US. These are bold steps for a company that was only founded 5 years ago, however, it has not been without its fair share of controversy. Misleading adverts, operating losses and public spats with investment bank Jeffries have plagued the company with negative PR. Despite all this, the commission free house seller has been well received by home owners. UK revenue grew by more than 100% in 2017 by attracting cost-conscious movers.

The next company which I believe has done well to ‘stick it to the man’ is Boohoo Plc. This ‘fast fashion’ clothes company took the fight to ASOS in 2006, and quickly became popular for its low prices. The company listed in 2014 and became a renowned growth stock by pushing 600% growth over the past 3 years. However, in recent months its share price has flagged amid concerns over share price inflation and eroding profit margins. This quickly pushed their share price to 175p, however, I don’t think profit margins being chipped away at present will hinder the company in the long term. Boohoo is still establishing itself in a ruthless online market where marketing is essential – and expensive. Furthermore, the company continues to diversify itself with acquisitions of other brands like Little Thing and Nasty Girl, which themselves need a surge of advertising to put them on the map. Yet this seems to be money well spent as each of these brands continue to explode in different demographics. So, after the group’s brands are well recognised, margins may steady. As they continue to step on the toes of ASOS with another 100% of revenue/profit growth in 2018 pencilled in, Boohoo will look to go global. If they carry on in the same trajectory that they have, David could become Goliath.

Disclaimer: When investing in equity markets your capital is at risk. All content posted on is opinion and not intended to be instructional. The site cannot be held responsible for any losses upon the following of the opinions expressed. 


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