History has shown the best way to grow your wealth in the long term is through the stock market. Whether you choose the Australian, US or UK markets as your stomping ground, it really doesn’t matter so long as you pick the best stocks.
We invest for different reasons and while some prefer to stick with blue-chip stocks such as Commonwealth Bank of Australia (ASX: CBA), BHP Billiton Limited (ASX: BHP) or National Australia Bank Ltd (ASX: NAB), it’s important to be open to the idea of investing in smaller companies. Whether it’s for income in retirement, or growth in the accumulation phase of your life, there’s something to suit everyone.
Here are five growth stocks to consider adding to your portfolio.
1. Village Roadshow Ltd (ASX: VRL)
Village could be considered both an income and growth stock because it trades on a low price to earnings multiple and pays a generous 4.3% fully franked dividend. Village is the name behind Village Cinemas, Wet’n’Wild, Movie World, Sea World and produces films such as The Great Gatsby.
2. M2 Group Ltd (ASX: MTU)
M2 is the owner of names such as Dodo, Primus, Eftel and Commander. Its tremendous growth in recent years is a result of its acquisitive business model. After acquiring a number of companies (such as Eftel and Primus) in rapid succession, its debt grew quickly and management turned to growing the company organically and improving synergies as they integrated the businesses. Management recently said the integration is tracking along nicely, so they could grow the company acquisitively again in the future. It too pays a generous dividend.
3. Slater & Gordon Limited (ASX: SGH)
Slater & Gordon is one of Australia’s premier law firms with branches throughout the country. It is the dominant player in personal injury and has been expanding its presence in the United Kingdom. Trading on a P/E of just 16 and a dividend yield of 1.6%, it’s a great long-term growth stock.
4. Senex Energy Ltd (ASX: SXY)
Senex is a rapidly growing oil and gas company with operations in the lucrative Cooper Basin in South Australia. Recently, pressure at one of its wells slowed quicker than expected and management indicated that production will come in at the lower range of its guidance of between 1.4 million barrels (mmbbls) and 1.6 mmbbls (2013: 1.25 mmbbls). This “mild” growth in production will be underpinned by a reserve replacement ratio of over 300%. Therefore, regardless of a short-term setback, it’s still an excellent long-term buy.
5. Cash Converters International Ltd (ASX: CCV)
At current prices, Cash Converters is my favourite stock on the Australian market. It needs no introduction but deserves your attention. Recently its share price took a hit following legislative changes to fees charged on small loans in Australia. However, Cashies is rapidly growing internationally and is being innovative with its “pay day” loans and Carboodle businesses. Now is a great time to buy its stock before the market realises its mistake.