3 rising star stocks growing across Australia

Successful business chains offer some of the best ways for investors to ride a wave of growth.

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Some of the best investing ideas you may have might be the very businesses operating right in your own community. They could be restaurants and retail stores, but they also might be professional service providers you didn’t know are publicly traded companies.

And just like a restaurant chain that spreads across a state, region or whole country, such a business could have years of potential growth ahead of it. You, as an investor, can latch onto a promising business chain and take the ride along with it.

Here are three stocks that do have the potential to grow and replicate themselves across Australia – and even overseas. Get them early enough in their growth phase and reap the rewards.

1) Domino’s Pizza Enterprises Ltd. (ASX: DMP)

The well-known takeaway chain has been serving up a lot of food to Australian customers for years. There is still room to grow here, but the kicker for this company is the recent acquisition of a 75% stake in Domino’s Pizza Japan. It believes there could be capacity for another 340 stores created on top of the current 260 over the next five years. Dividend yield is 1.5% fully franked and earnings forecasts are for steady growth.

2) Slater & Gordon Limited (ASX: SGH)

This law firm operates such brands as Slater & Gordon, Trilby Misso Lawyers and Conveyancing Works in Australia, as well as Russell Jones & Walker and Claims Direct in the UK. With 70 offices in Australia and 12 in the UK, it has good geographical spread with further expansion potential. Since late 2012 the stock has gone from about $2 to over $5 now. This is a great example of how a professional service company can organically grow by offering legal services, which attract premium fees for better profit margins.

3) Greencross Limited (ASX: GXL)

The company has a growing network of veterinary practices in a highly fragmented industry mostly made up of single owner private businesses. It can steadily buy smaller competitors at relatively low price multiples and then improve margins through network scale and support. It recently merged with Mammoth Pet Holdings, which operates the Petbarn pet supplies store chain, to expand its exposure to animal care and create cross-banner business marketing.

The stock has risen from $2 to about $9.50 since early 2012. There is still more room for store expansion, but the stock has a price/earnings ratio of 39, so investors must realise that if the company slows down acquisitions, the share price could come off. Definitely add this one to your watchlist and wait for price weakness opportunities.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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