I am sure every investor would love to go back in time 20 years and invest in Commonwealth Bank of Australia (ASX: CBA) or Westpac Banking Corp (ASX: WBC) considering the growth and income that they have produced.
To experience all that growth you have to invest in the smaller companies of today before they become huge.
There is an ongoing food boom in Australia which could help a whole range of companies grow. Here are just three that could turn into the blue chips of the future:
Select Harvests Limited (ASX: SHV)
Select Harvests is Australia's largest listed almond producer with a market capitalisation of $416 million.
It hasn't had a great 18 months with the almond price per kilo and its share price both falling fairly substantially. However, as a cyclical business I believe the best time to buy is when it's unloved – similar to how the best time to buy the mining companies was at the start of 2016.
Management has a plan to grow its annual production from 16,000 tonnes in FY17 to 24,000 tonnes by 2025. This could be a big boost to revenue if it achieves this growth and continues expanding its export business.
Select Harvests is trading at 19x FY17's estimated earnings with a trailing grossed-up dividend yield of 8.83%.
Collins Foods Ltd (ASX: CKF)
Collins Foods is a large franchisee of KFC outlets across Australia and it has a market capitalisation of $502 million.
The exciting thing about Collins Foods is that it's following in Domino's Pizza Enterprises Ltd's (ASX: DMP) footsteps by expanding overseas. It is expanding in both Germany and the Netherlands, which are two huge markets that could drive growth for years to come.
It's trading fairly cheaply at 14x FY17's estimated earnings with a grossed-up dividend yield of 4.36%.
Tassal Group Limited (ASX: TGR)
Tassal is Australia's largest salmon farmer, it's based in Tasmania and has a market capitalisation of $742 million.
Australia's diet is steadily becoming healthier, which is seeing an increase in the amount of fish being eaten. The Asian middle class is also consuming more salmon, which is seeing Tassal's export sales grow strongly.
Tassal is trading at 15.3x FY17's estimated earnings with a grossed-up dividend yield of 4.85%.
Foolish takeaway
I think all three of these businesses could be substantially larger in five years' time, even if there is a bit of volatility thrown in every so often. Collins Foods has the potential to grow the quickest out of the three with its expansion plans overseas and a decent dividend yield.
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