Investing in growth stocks can be an extremely rewarding pastime.
For long-term investors, there's few feelings better than the one you get when you see your investment double, triple or quadruple in just a few short years.
However, finding those stocks which are about to take off isn't easy. After all, every CEO says their company has huge potential.
Whilst historical performance should only be used as a guide, investors should have each of the following five super-growth stocks on their watchlist and could look to start a position during times of heightened volatility.
- Corporate Travel Management Ltd (ASX: CTD) is up 611% in the past five years. Whilst the travel management company's international strategy may only be at the beginning of something bigger and better, investors looking to buy shares today will have to pay 57x profits per share – which is never easy to stomach.
- iProperty Group Ltd (ASX: IPP) is an online realestate listing service focused on booming economies throughout Asia – namely, Thailand, Malaysia, Singapore and Hong Kong. Up 616% in the past five years, iProperty Group shares remain a speculative buy despite the company boasting a market capitalisation of $570 million.
- iSentia Group Ltd (ASX: ISD) is a relatively new listing on the ASX yet hasn't wasted any time in proving itself as a stock with loads of potential. The business intelligence company has seen its shares jump 50% in less than a year. Looking ahead, analysts continue to forecast strong profit growth but it currently trade at 26x forecast earnings per share.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has had a well-documented rise to fame both here in Australia and aboard – particularly in Japan. Whilst Domino's bread and butter is pizzas, its use of technology and quality of service are transforming the company. Domino's shares are up nearly 600% in the past five years alone.
- TPG Telecom Ltd (ASX: TPM) has thrust itself into the media spotlight recently, following its $1.4 billion takeover of iiNet Limited (ASX: IIN). The increasing uptake of internet-enabled devices and rise of machine-to-machine (M2M) devices bodes well for telecommunications companies long into the future. Arguably that potential is even greater for companies like TPG which have invested heavily in infrastructure. It's up 325% in the past five years.
Are they a buy today?
The number one rule when investing in growth stocks is to avoid overpaying for the potential. Depending on your assessment of the potential of the company, versus its ability to actually capitalise on it, you may believe some of these stocks look cheap at today's prices. However, personally, I'm holding off buying shares in each of them, for now.
