Companies that can show consistent growth have the ability to deliver exceptional shareholder returns. Examples of this include the likes of Sirtex Medical Limited (ASX: SRX) and CSL Limited (ASX: CSL) that have returned over 300% and 100% respectively for investors over the past five years; purely because they are able to consistently grow revenue and earnings.
Right now investors are faced with a huge array of companies that have decent growth prospects. Companies like Amcor Limited (ASX: AMC) are expected to grow earnings in the vicinity of 10% per annum over the next three years and there are many more speculative stocks that offer much higher potential growth.
The Best Option
In my view, one of the best options on the ASX for investors looking for a balance of risk and reward that leans more towards reward is Crown Resorts Ltd (ASX: CWN). Crown is engaged in the business of making money from gambling, and as such doesn’t appeal to all investors, but does present an interesting opportunity for long-term investors.
Not only does Crown have a huge pipeline of projects to complete and have contribute to earnings by 2020, but it already has dominant assets in place to provide cashflow to fund the projects. In Australia, Crown currently owns and operates the sole casinos in Melbourne and Perth, dominating the respective markets as well as offering integrated hotels at the respective sites.
Crown also owns Crown Aspinalls in London, a higher-end casino that provides only a small percentage of group earnings.
Crown’s line-up of upcoming projects includes:
- a resort complex in Macau’s Cotai Strip (due 2016) and one in Manila (due 2014) operated by Melco Crown Entertainment Ltd (NASDAQ: MPEL),
- a new Sydney Casino at Barangaroo, due in 2019,
- a new casino in Sri Lanka and potentially another in Japan, and
- a new resort complex on Las Vegas’ famous Hollywood Boulevard.
Crown’s massive pipeline of projects is expected to be funded from a combination of current and future free cashflow and some debt, meaning that dividends are not expected to rise any time soon. If lack of dividends doesn’t faze you; long-term shareholders may take recent share price weakness as an opportunity to buy a stake in this growth story.
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Returns as of 6th October 2020
Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie
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