Everybody wants to retire rich. Indeed, that seems to be the most popular goal of many investors when they make their first foray into the investment world. Of course, it’s easier said than done; there are numerous pitfalls and obstacles for investors to navigate. However, the outcome seems to largely depend upon buying shares in companies that are able to grow their earnings at a brisk pace, without paying too much for the privilege. Over time, the returns from doing so can really add up. So, with that in mind, here are three companies that seem to offer growth at a reasonable price and, as such, could help you to retire rich.
At first glance, investors may be put off Santos Ltd (ASX: STO) because of its sky-high valuation. Indeed, the hydrocarbon specialist trades on a P/E ratio of 25 – that’s 55% higher than the ASX’s P/E of 16.1. Furthermore, shares in Santos have had a disappointing 2014, with them posting a fall of 3% versus a gain of 3% for the wider index. However, growth prospects are the key reason why Santos could help you retire rich. Even in the current year, the company is expected to grow the bottom line by 21%, while next year is set to be even better, with EPS growth of 50% expected. Therefore, when the price to earnings growth (PEG) ratio is used to value Santos, it looks good value on 0.7 and that means it could be a winning investment.
Slater & Gordon Limited
It’s been a much better year for investors in Slater & Gordon Limited (ASX: SGH), with shares in the company gaining 8% during the course of 2014. Despite this, Slater & Gordon still trades on a P/E that is only 6% higher than that of the ASX (17.1 versus 16.1) and, when growth prospects are taken into account, shares in the company seem to offer good value for money. For instance, Slater & Gordon is forecast to deliver EPS growth of 25% in the current year to June 2015. Combining that strong growth rate with a P/E ratio that is only at a slight premium to the wider index means that Slater & Gordon’s PEG ratio is just 0.8, which highlights its strong future potential.
Crown Resorts Ltd
Like Santos and Slater & Gordon, Crown Resorts Ltd (ASX: CWN) doesn’t look cheap at first glance. Indeed a P/E ratio of 16.5 is roughly in-line with that of the wider market. However, growth potential is significant, with Crown’s bottom line forecast to increase by 11.5% in the current year to June 2015. This puts Crown on a PEG of just 0.8 and, in addition, shares also yield an impressive 2.5% (50% franked). This means that, alongside Santos and Slater & Gordon, Crown could help you to retire rich.
Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.
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