How I’d find top growth shares to buy at cheap prices in December 2020

Taking the time to find top growth shares to buy at cheap prices could be a worthwhile move in the long run. It may allow an investor to take part in improving company performances, while benefiting from a potential increase in valuation over the coming years.

Through focusing on solid businesses operating in sectors with strong growth outlooks, but that face challenging near-term prospects, it may be possible to capitalise on the stock market’s future growth potential.

Identifying top growth shares in attractive sectors

Top growth shares are likely to deliver improving profitability in the coming years. That is because of the attractive prospects for the industries in which they operate. If they have weak operating conditions in the years ahead, they are more likely to record disappointing sales and profit growth.

As such, identifying industries with attractive growth prospects could be a sound move. This process may understandably be more difficult at the present time due to the rapid changes that are taking place across the global economy in response to the pandemic. However, some sectors appear to have sound long-term growth prospects that could be conducive to rising profitability for their incumbents.

For example, sectors such as healthcare and technology may provide long-term opportunities for top growth shares. Think of trends such as an ageing world population and changing consumer tastes that rely to a greater extent on new technology. They may mean that opportunities to expand sales and profitability are extensive within those sectors.

Focusing on strong companies facing uncertain operating conditions

Finding top growth shares at cheap prices may mean focusing on strong companies that face challenging near-term prospects. Strong companies may be those that have solid financial positions that can be used to buy up rivals or to develop new goods and services. They may also have wide economic moats that could enable them to deliver superior financial performances to their peers over the long run.

However, they may be facing difficult operating conditions in the short run caused by the pandemic. This may provide an investor with the opportunity to buy them while they trade at cheap prices. Other investors may be more concerned with their near-term outlooks, rather than their long-term growth potential. Through having a patient approach, it may be possible for an investor to capitalise on long-term growth opportunities at low prices.

Managing risks

Clearly, the prospects for top growth shares can change rapidly. Their current outlooks may improve or worsen over the coming months and years. Therefore, it is crucial to manage risk, in terms of diversifying across a range of sectors and geographies. This may not only mean lower losses, but could also create a less volatile portfolio. And that could provide a more effective means of achieving an investor’s financial goals in the coming years.

A Top Share with Enormous Growth Potential

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While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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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.

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