3 growth shares I’d buy with $3,000 today

It’s getting harder to identify when a stock is good value or not. Vocus Communications Limited (ASX: VOC) and TPG Telecom Ltd (ASX: TPM) looked as though they had finally settled at a price, yet Vocus’s AGM on Tuesday caused both to drop further.

If you pick a company that’s growing its profits and dividend, even if its share price has decreased temporarily, it should turn out ok over the long term.

Here are three companies that are offering growth at good prices:

Collins Foods Ltd (ASX: CKF)

Collins Food is the operator of Sizzler and KFC outlets in some Australian states. It has a market capitalisation of $535 million and growing.

The main reason why it has a lot of potential growth is because it recently announced it will purchase 11 KFC restaurants that are located in Germany.

The purchase will bring the total KFC outlets to 202, which doesn’t add a lot to Collins Food’s total, but the potential for overseas growth is exciting.

Australia only has a small population, but bringing Germany and other countries into the equation means more growth potential. Just look at how much more room for growth Domino’s Pizza Enterprises Ltd. (ASX: DMP) has now it’s overseas.

Collins is trading at 18.8x FY16 earnings with a grossed up dividend yield of 3.4%.

Retail Food Group Limited (ASX: RFG)

Retail Food Group is another operator with overseas expansions plans. The master franchisor of Gloria Jean’s, Donut King, Brumby’s Bakery and more has a market capitalisation of $1.1 billion.

Its combined network spans 69 countries and 2,530 stores, with no plans to stop there. It wants to add another 1,000 stores to its network.

Retail Food Group shares are trading at 15.3x FY16’s earnings with a grossed up dividend yield of 6.34%.

Ramsay Health Care Limited (ASX: RHC)

Ramsay is Australia’s largest operator of private hospitals with a market capitalisation of $14.5 billion. It also has a large hospital network in the UK, France, Malaysia and Indonesia.

Ramsay is perfectly situated to benefit from the aging population in the UK and abroad, which should provide a growth runway for many years to come.

Ramsay is looking to boost earnings by opening up large pharmacies in central city locations nearby to its hospitals. It’s also looking to expand into other countries such as China, which would give it many more patients to treat.

Ramsay is trading at 30.6x FY16’s earnings with a grossed up dividend yield of 2.4%.

Foolish takeaway

All of these businesses have grown impressively over the last two years. I think each of them would make good additions to any portfolio.

In the short term I expect Retail Food Group and Collins Food to perform well, but in the long term Ramsay has the most potential for growth.

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Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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