Should you buy these highly priced shares?

The market prices growth companies much higher than slow-moving companies to take into account the company’s future growth.

Investors have to ask themselves whether paying high prices today is worth it for the growth shares in question. Here are three expensive growth options with strong prospects:


BWX is the natural beauty brand that owns the Sukin range of products. It’s experiencing strong growth in export markets like the UK and Canada.

The company has just announced it’s going to acquire Mineral Fusion for $38.4 million, it’s the number one natural cosmetics brand in the US. This gives BWX a strong opportunity to expand both product lines and grow in the USA too.

BWX is currently trading at 33x FY17’s estimated earnings with a grossed-up dividend yield of 1.79%.

Costa Group Holdings Ltd (ASX: CGC)

Costa Group is the fresh food producer that grows berries, mushrooms, citrus fruit, tomatoes and avocados. It also recently acquired Lankester Avocado orchards which will expand its avocado business further.

The storm in Queensland damaged a lot of crops, particularly tomatoes, which is why tomato prices are so high at the moment. This should benefit Costa materially when it discloses its next report.

Costa is currently trading at 63x FY16’s earnings with a grossed-up dividend yield of 2.84%.

REA Group Limited (ASX: REA)

REA Group is the owner of and has large stakes in other property website businesses.

It recently announced that it would be investing in a mortgage broker and growing its strategic partnership with National Australia Bank Ltd (ASX: NAB).

REA Group is currently trading at 35x FY17’s estimated earnings with a grossed-up dividend yield of 1.93%.

Foolish takeaway

All three of these businesses have bright futures ahead. I wish I had invested in each of them when a cheaper opportunity had presented itself in the past.

At the current prices, I think BWX could make the best long-term buy because the synergy it creates with its new acquisition could be significant. However, I’ll be waiting on the side-lines and hoping that the price comes down for a cheaper entry.

Until then, I've got my eye on these dividend shares which are much cheaper prices and offer investors good returns now with their big dividends.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool's dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You probably don't know this market leader, but it's making waves in Asia and already boasts a term-deposit-crushing dividend above 4%. A debt free balance sheet and dominant market position at home and abroad mean this company offers investors income and some real-deal growth potential...

Simply click here to grab your FREE copy of this up-to-the-minute research report on this rising star right now.

Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia owns shares of BWX Limited and National Australia Bank 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.