Your instant 7 share high-growth portfolio

It’s time to put some real investing horsepower into your portfolio. You may have some dividend stocks or maybe a couple of small speculative stocks for a punt, but growth is what propels the returns the quickest.

For this instant portfolio, we want companies that are expected to send earnings up at least 15% annually and much more. At 15%, a company could potentially double their earnings in less than five years. At 20%, that becomes 3.6 years and at 30% the time is less than two-and-a-half years. That’s a blistering pace.

Warning: These stocks aren’t secrets, so they have high price-earnings ratios, which could put some investors off. A high PE stock can be sold off quickly if they disappoint the market, so you must be aware you are paying a premium for high growth.

1)  Sims Metal Management Ltd (ASX: SGM) is the world’s largest listed scrap metal dealer. It is going through a major restructuring that it estimates will cut waste and inefficiencies to raise earnings before interest and tax (EBIT) 3.5 times over five years.

2)   Greencross Limited (ASX: GXL) is a growing network of veterinary practices that steadily buys other private practices. It has recently acquired the successful Petbarn pet supplies chain with its 182 stores in Australia and New Zealand. Both business chains are still expanding, so the cross-business synergies and earnings outlook are great.

3)   James Hardie Industries plc (ASX: JHX) is a major building materials producer known for its fibre cement products like Hardiplank. It gets about 73% of total revenue from the US housing market. As the real estate industry is recovering after the GFC in the US, there is more construction which increases demand for building supplies.

4)   Oil Search Limited (ASX: OSH) has a 37.5% stake in the PNG LNG project, which started to export LNG this year and will reach full production capacity over the next two years. The company expects its output will increase four times by then and earnings will be up accordingly. There is scope to expand the project even more after that, so I am looking forward to seeing that.

5)   REA Group Limited (ASX: REA) is still growing at a high rate thanks to its property search website, the number one market leader for online property search services. Now it has plans to be in the US market and has acquired a 20% share in the third-largest property website there. It always has a high PE, but has delivered high growth annually for many years.

6)   G8 Education Ltd (ASX: GEM) is an early education business juggernaut, acquiring childcare and education centres all across Australia and in Singapore. Buying blocks of privately owned centres at a time, it now has 349 in Australia. However, it’s nowhere close to being done when there are so many single, privately owned centres that can still be acquired.

7)   SEEK Limited (ASX: SEK) has the number one job search website in Australia, which many Foolish readers may know well – Its big plans are to be a major employment search and training organisation from Asia all the way to South America. It has acquired a number of local established businesses in South East Asia and is a major shareholder in China’s largest job site Zhaopin.

These seven companies all have great earnings growth potential, but you should do your own research to make the best choices. Just to make the list a lucky eight, there is one more stock, a tech stock, that has caught the attention of the Motley Fool’s analysts.

The Motley Fool has just released a special video report on our analysts’ #1 ASX tech pick -– all about the one Australian company poised to win big from the ‘cloud computing’ trend. (Hint: The shares are already up over 100%!) Click here to claim your FREE copy.


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

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