5 high-growth stocks to buy the grandchildren    

Investing just a small amount in high-growth stocks at reasonable valuations can deliver unbelievable returns over the long term.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If you've got a small amount of spare money you're looking to turn into a small fortune for the children or grandchildren over long-term horizons then high growth stocks built for the future are where you should look. Software and technology businesses able to meet increased corporate and consumer demand for their services are likely to perform particularly well. Fortunately the S&P/ASX ALL ORDINARIES Index (INDEXASX: XAO) currently has several businesses offering up excellent opportunities in this regard.

GBST Holdings Limited (ASX: GBT) is a software services provider to the financial services industry globally, especially the back office functions of major banks, brokers and fund managers. Its growth mission is to sell its software services globally and this July it has announced the successful delivery of two major software service provision deals with a large U.S. investment bank and one of the USA's best known capital markets players, Raymond James.

GBST is coming off a small base and starting to deliver on its growth potential, best of all selling for $3.33 it still trades on a very reasonable 15 times projected FY 2014 earnings. Given the recent success, future potential, and growing dividend, GBST looks a strong buy.

Vocus Communications Limited (ASX: VOC) is another up-and-coming technology business with a strong future. Vocus provides fibre-optic internet services to corporate clients and with an excellent management team, competitive advantage and business built to serve future demand, Vocus also looks a buy. Selling for $5.08 it trades on around 22 times 2015's projected earnings with a growing dividend payout.

My Net Fone Limited (ASX: MNF) is another telecommunication technology business built for changing consumer and corporate demand. It provides Voice over Internet Protocol (VOIP) services that allow people to digitally communicate over the Internet, rather than through the traditional fixed line telephone or mobile networks. Selling for $2.57 My Net Fone trades on around 22 times estimated 2015 earnings and like all the above businesses, has been steadily growing its dividend.

Amcom Telecommunications Limited (ASX: AMM) is another junior technology stock widely tipped to have a stellar future. It provides high speed communication services to a range of corporate and public sector clients, with potential to grow as demand naturally increases. Selling for $1.95 Amcom trades on around 17 times analysts' forecasts for 2015's earnings.

Finally iiNet Limited (ASX: IIN) is a mid-cap telco founded in a Perth garage in 1993 now worth over one billion dollars, which shows just how quickly successful telco or technology stocks can grow. iiNet's growth runway still looks reasonable as it puts internet users onto the National Broadband Network (NBN). Australia's internet technologies are still relatively under-developed compared to the high speeds enjoyed by the rest of the world, and company's like iiNet look to have plenty of opportunity to profit yet.

Motley Fool contributor Tom Richardson owns shares in My Net Fone, iiNet, Vocus and GBST. You can find him on Twitter @tommyr345

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »