2 growth shares to buy instead of CSL Limited

CSL Limited (ASX:CSL) is one of the ASX's best companies, but looks expensive. Here's what you can buy instead.

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Biotech titan CSL Limited (ASX: CSL) is held by many to be the best company on the ASX. It's hard to argue with that statement, with the company's very low cost of debt, strong pipeline of proprietary treatments, and history of rewarding shareholders.

However, at $126 a share, CSL looks expensive. This is a $57 billion dollar business and, despite the recent upgrade, it would be prudent to expect that double digit profit growth is an exception to the norm, not the norm. With that in mind, here are two smaller growth shares that could become much bigger over time:

Greencross Limited (ASX: GXL)

This vet and pet retailer has a solid growth strategy laid out – steady acquisition of new clinics and pet stores, as well as the addition of veterinarians to its existing stores. Company statistics show that adding an in-store vet both results in a lower pay-back time for the vet establishment costs, whilst also improving retail sales. With more than 100 stores yet to receive an in-store vet, and as a minority player in the Australian pet market, Greencross has a respectable runway of growth ahead of it.

Collins Foods Ltd (ASX: CKF)

This company's primary business is its KFC restaurants throughout Australia, and, thanks to recent acquisitions, Western Europe. It grows primarily via acquisition, although Collins has a strong record of improving the performance of businesses it acquires. Collins also has a growing network of Sizzler restaurants throughout Asia. The downside is that the group carries a fair whack of debt and profit margins are low – which means that continued operating excellence is key to the group's performance.

However, there are certainly plenty of KFC restaurants out there, and if management remains disciplined in its acquisitions, Collins could grow to be much larger over time.

Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia owns shares of Greencross Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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