These four growing companies are all up over 100% in 12 months or less. They all have considerable growth to come, but are they still worth buying at current prices?
1. REA Group (ASX: REA)
REA Group is the owner of the Australian real estate website realestate.com.au, and it also has successful real estate websites in Italy and Europe. REA Group benefits from the support of Rupert Murdoch's News Corp (ASX: NWS), its major shareholder, and the network effect, which makes it difficult for competitors to undermine the company's pricing power.
REA Group will continue to raise its prices as the Australian housing market heats up, and it has plenty of cash to pay for any necessary capital expenditure or even an acquisition. REA Group's shares are up 122% in the last year (and it's now priced for perfection).
2. iProperty Group (ASX: IPP)
iProperty is similar to REA Group, but is at an earlier stage in its development (it has a market capitalisation of just over $360 million). The company owns online real estate platforms in Hong Kong, Malaysia, Singapore and Indonesia. By far its most important market is Hong Kong (where it has the dominant website), and the company is supposedly on the verge of breaking even.
At the current price of $1.95 the company is trading at more than 20 times sales, which is very expensive. While the shares are up 113% since this time last year, they will continue to rise over the long term if iProperty Group can mimic REA Group's performance.
3. G8 Education (ASX: GEM).
G8 Education owns and operates over 200 childcare centres in Australia, and has a growing business in Singapore. I failed to buy G8 when I looked at it in late 2012: an expensive mistake arising from a bias against childcare centre operators (remember ABC Learning?).
Importantly, G8 has conducted a series of capital raisings to fund its acquisitions, and has kept debt to moderate levels. G8 is up 116% in 12 months, but I think it is still available at an attractive price. It has also paid consistently rising quarterly dividends. It currently boasts a trailing yield of 3.4%, fully franked.
4. Tassal Group (ASX: TGR)
After several years of relatively heavy capital investment, salmon farmer Tassal is finally reaping the rewards. After experiencing some corporate upheaval in 2012, the company went on to see a share price rise of 115% in the last 12 months. In part, this was due to improved margins and close to a 20% increase in its profits.
It's worth noting that the profit driver for Tassal has been increasing sales of salmon in Australia, and exports have been falling. While the company has paid down debt and is in a strong position, Tassal faces the risk of losing its "crop" to disease, so there are risks involved. Tassal isn't drastically overpriced, but it doesn't look like a bargain either. It pays an unfranked dividend of about 2.9%.
Foolish takeaway
These four companies have very different businesses, but all have delivered for investors in the last year. They prove that the strategy of buying growth at a reasonable price can certainly pay off. Each company is likely to continue to grow profits, and all four deserve a spot on your watchlist.
