Over the long term, the best businesses to own are growth stocks because they usually create the best total shareholder returns.
Here are four stocks that are very high on my watchlist:
A2 Milk Company Ltd (Australia) (ASX: A2M)
A2 Milk is a New Zealand-based company that is generating tremendous growth of revenue and profit thanks to its impressive expansion of sales into other countries and products.
I think there is a lot of growth in the business, but it could be a bit expensive trading at 33x FY17's estimated earnings.
Costa Group Holdings Ltd (ASX: CGC)
Costa is one of Australia's largest producers of fresh food with a market capitalisation of $1.43 billion.
It grows berries, mushrooms, tomatoes, citrus fruit and avocadoes. Earnings could grow at a fast rate thanks to its expansion plans in Australia, China and Morocco.
Costa is currently trading at 56x FY16's earnings with a grossed-up dividend yield of 3.2%.
Gentrack Group Ltd (ASX: GTK)
Gentrack is another New Zealand-based company which specialises in software and billing solutions for utility companies and airports.
It has made a number of acquisitions recently that bolsters the overall offering it can market to clients.
The nature of its software means that its earnings are very defensive and clients are unlikely to leave unless something goes very wrong.
Gentrack is trading at 35x FY16's earnings with a trailing dividend yield of 2.5%.
BWX Ltd (ASX: BWX)
BWX is the owner of the natural beauty brand Sukin.
There is a momentum shift towards more natural products and BWX is seeking to capitalise as much as it can by taking Sukin to many overseas countries. It's achieving beautiful results with double-digit growth in all of its export markets.
BWX is trading at 30x FY17's estimated earnings with a grossed-up dividend yield of 1.94%.
Foolish takeaway
None of these growth stocks are trading 'cheaply', which is sadly why they are on my watch list and not in my portfolio yet.
Out of the four I think I'm most interested in Costa and BWX, hopefully they become a bit cheaper so that I can buy some shares.
Until then, I'm looking for every opportunity to buy at least one of these growth stocks which look much better value to me.
