Unfortunately when it comes to growth shares, a good number of them will be trading on sky high earnings multiples. Whilst this is fine if the company can successfully deliver on the market's high expectations, it can go terribly wrong if the expected growth fails to materialise.
Luckily though there are a few growth shares out there trading on what I deem to be reasonable valuations. Here are three that I like:
The Domino's Pizza Enterprises Ltd. (ASX: DMP) share price is approximately 28% lower than its 52-week high at present. At 43x trailing earnings Domino's may still come at a premium to the market average, but with management forecasting full-year profit growth of 32.5%, I think it more than justifies the premium. Whilst there have been concerns over unpaid wages by franchises, I feel the current share price provides investors with a compelling risk/reward.
The Mayne Pharma Group Ltd (ASX: MYX) share price has fallen a whopping 28.5% in the last six months. This decline is largely the result of the company being under investigation from the U.S. Department of Justice for price fixing. But it is worth noting that management has stressed many times that it doesn't believe any penalties imposed will be material to earnings. So with the company delivering triple-digit half-year profit growth and its shares changing hands at just 14x annualised earnings, I think Mayne Pharma could be a great investment.
The current Money3 Corporation Limited (ASX: MNY) share price means its shares are trading at just over 11x trailing earnings. I think this is cheap for a company growing as strongly as Money3 is. Thanks partly to the strong performance of its secured auto loans business, the company recently reported a 37.7% jump in half-year net profit after tax to $13.7 million. This strong performance looks set to continue in the second-half, with management increasing its full-year profit guidance to $27.5 million last month. A further bonus is that its shares provide a trailing fully franked 3.2% dividend.
