Are these 4 growth stocks in buying territory now?

Since the S&P/ASX 200 Index (ASX: XJO) (Index: ^XJO) has come off the highs at the start of September, a number of growth stocks have seen their share prices slide. The businesses are still good, but the market’s attention has been pulled away by macroeconomic events like US interest rate rises, a falling Aussie dollar and the weakening of the iron ore and coal markets.

I say let them worry about that. Foolish investors focus on company earnings for the next several years out, not what’s going to happen next week or next month. Here are four growth stocks that look cheap for what they have to offer.

JB Hi-Fi Limited (ASX: JBH)

The electronics specialty retailer has given up about half its gains it made after rising from $8 to $23 in 2013. Analysts still forecast it to raise earnings over the next two years. Although the market is wary of retail stocks, I think it will follow up its recent net profit gain with more of the same. That’s because it is creating more of its JB Hi-Fi HOME stores that have been performing well with like-for-like sales growth. I think it’s near a bottom, so I would start picking up shares.

Sonic Healthcare Limited (ASX: SHL)

Australia’s leading medical diagnostic and pathology company has traded sideways for a number of months. Healthcare stocks can hold up well even when the economy is slow. Also, the company gets about half of its revenue from overseas. With a weaker Aussie dollar, international earnings can get a boost when converted back into Australian currency. It will also benefit from the rise in private health insurance under the U.S. Obamacare program with more people using diagnostic testing.

McMillan Shakespeare Limited (ASX: MMS)

I have been watching this stock getting its legs back after a horrendous drop in July last year. Its salary packaging and novated vehicle lease business would have been adversely affected if proposed Federal changes to the Fringe Benefits Tax had happened. However, they didn’t and there was no fundamental change to the company. It stated its business level is now back to normal, but the share price has not fully recovered. This is a buying opportunity that long-term investors can take advantage of.

NIB Holdings Limited (ASX: NHF)

The private health insurance provider has shed about 14% of its share price since early September. Its recent full year underlying net profit was up 12%, but the market has cooled, taking the stock down to $2.90. Over the next several years, earnings and dividends are forecast by analysts to rise. Part of the recent price weakness may be from the upcoming IPO of Medibank Private, the fourth largest health insurance provider by market share (NIB is fifth).

Currently, NIB is the only one of the top five listed on the ASX, so when Medibank Private lists, that will give some competition for investor funds. This could slow NIB Holdings’ share price ascent. I would wait on this stock until after the Medibank Private listing for a lower entry price.

One more thing…

If you are looking for good growth and solid dividends, then there’s one more stock, a small ASX company our top analyst, Scott Phillips, recently identified as a cheap but growing stock with a 6.3% grossed-up dividend yield.

The Motley Fool has written a free report “The Motley Fool’s Top Dividend Stock for 2014-2015” which it’s sharing with all interested investors.

If this is you, simply click on the link here and enter your email address – it takes less than 30 seconds – and we’ll send it to you, completely FREE!

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

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.