I think this forgotten growth stock could double my money this year

In the long term, the average annual growth rate for stocks is around 8%. Naturally, growth stocks help pull this average higher. Usually these companies are rapidly increasing their revenue, with their stock prices rising rapidly to keep up with their better prospects. In some cases, I can get high returns (even double my money) in a year or more. Here are the stocks that I think fit this bill right now.

Good idea

This company YOU AT (LSE: TUI). Package holiday operators are struggling during the pandemic, understandably more than most. The problem here is providing everything from flights to hotels. So even if certain airline operators are struggling, or hotel brands are having a bad time, TUI is hit on all fronts.

In the financial years 2020 and 2021, the business lost more than €5.5bn. The share price naturally falls and is down 70% in three years and 42% in the last year. It is now trading at 146p.

But I think it has the potential to double the money. It has risen 31% in the last three months. In its Q4 December update, it announced that “all segments [are] reported positive underlying EBIT for the first time since the pandemic.

This is big news, and it shows that the company has finally recovered from the pandemic. Q4 customer numbers were at 93% of full-year 2019 levels. I expect this to be over 100% by summer.

The potential to reach the level of 2019

My guess is that the stock price can double from the assumption that it can reach or exceed the performance of 2019.

In 2019, the business generated an operating profit of €445m. In 2022, he earns €326m. If this can rise in 2023 to €450m-€500m, I expect the share price to reach the same level it was trading at in 2019 (400p-500p). From current prices, doubling it would only be around 300p. So my estimates here are purely conservative in nature.

The main risk in my view will come from the high debt burden and the cost of paying off this debt. Net interest costs in 2022 were €474m, up from €52m in 2019. That’s a pretty big shift, and even if the business takes steps to reduce the burden, it’s still a negative drag on net profit.

A growth stock worth remembering

I call TUI a ‘forgotten’ growth stock because I think a lot of people ignore it because it doesn’t live up to expectations. For those who want exposure to airlines, there is a special stock for that. It is the same for cruises, hotels and other offers that TUI has. I don’t think many are looking for TUI specifically.

I’m seriously thinking about adding a share to my portfolio this month, as I feel the company is starting to take off. Financial results should support this in Q1 and beyond, which is when I think the share price could lose ground.