Growth shares have fallen out of favour with some parts of the market over the past few months largely on the back of the rotation back into mining and bank shares.
However, over the medium term, I think this trend could reverse as investors once again look for shares that have the potential to grow their earnings at a much higher rate compared to the broader market.
While growth shares are typically more risky than their 'value' counterparts, I think they can play an important role in portfolio construction, especially when they are purchased at a reasonable price.
So with those points in mind, here are what I think are 10 of the best growth shares on the ASX right now:
| Company | Market Cap | Most Recent EPS Growth | PEG Ratio | Dividend Yield | 5Yr Total
Shareholder Return |
|
Corporate Travel Management Ltd (ASX: CTD)
|
$2.1 billion | 51% | 1.08 | 1.4% | 59.1% |
|
Webjet Limited (ASX: WEB)
|
$1.1 billion | 56% | 0.81 | 1.6% | 32.0% |
|
Nanosonics Ltd. (ASX: NAN)
|
$869 million | N/A | – | – | 40.1% |
|
Aristocrat Leisure Limited (ASX: ALL)
|
$10.9 billion | 68% | 1.3 | 1.7% | 44.7% |
|
Mayne Pharma Group Ltd (ASX: MYX)
|
$2.0 billion | 109% | 0.81 | – | 43.4% |
|
a2 Milk Company Ltd (Australia) (ASX:A2M)
|
$1.6 billion | 258% | 0.5 | – | – |
| Blue Sky Alternative Investments Ltd (ASX: BLA) | $540 million | 92% | 0.85 | 2.0% | 59.9% |
| CSL Limited (ASX: CSL) | $55.8 billion | 39% (at constant currency) | 1.23 | 1.4% | 30.0% |
| Treasury Wine Estates Ltd (ASX: TWE) | $8.8 billion | 47.4% | 1.34 | 1.9% | 27.4% |
|
Nextdc Ltd (ASX: NXT)
|
$1.1 billion | N/A | – | – | 12.2% |
Are any of these shares a buy right now?
Most of the shares listed above have delivered impressive earnings results over the past few weeks and this has seen most of their share prices enjoy strong levels of support.
As a result, I wouldn't classify any of the shares as 'bargains' right now, despite their positive growth outlooks.
However, if I had to choose three shares to buy right now, I would include:
- Webjet – The online travel agent continues to beat market expectations and has done an excellent job of managing recent acquisitions. The shares also trade on a price-to-earnings growth ratio (PEG) of less than 1 which means they could still be good value for investors.
- Mayne Pharma – Is one of the few shares from the list above that has been punished as a result of a legal dispute. The company's underlying operations continue to show impressive levels of growth and the shares will rebound strongly if the company can successfully navigate its way through the legal dispute.
- Nanosonics – The market opportunity for this disinfectant company is massive and its technology is already changing treatment guidelines across the world. The company has developed a nice platform to generate an ever-growing stream of recurring revenue and, at the same time, is still installing new systems at a rapid pace.
