One of the most frequent complaints I hear about growth shares is that a lot of them trade on sky high earnings multiples.
While this is certainly the case for quality shares such as Aconex Ltd (ASX: ACX) and WiseTech Global Ltd (ASX: WTC), not all growth shares trade on exorbitant multiples. In fact, there are some out there that I would consider cheap.
Here are two which I think investors should look at today:
Aristocrat Leisure Limited (ASX: ALL)
This gaming technology company's shares have been on a tear this year, rising over 33% year-to-date. It isn't hard to see why Aristocrat Leisure's shares have performed so strongly. First-half net profit after tax and before amortisation of acquired intangibles (NPATA) increased by 49% to $272.9 million.
Although second-half profit is expected to be a touch slower due to one-offs in the first-half, I expect full-year NPATA growth of at least 30%. This means its shares are changing hands at around 28x estimated forward earnings, which I think is great value given the exceptionally strong long-term growth prospects of its digital business.
Domino's Pizza Enterprises Ltd. (ASX: DMP)
Due to a sell-off of its shares following a weaker-than-expected full-year result, this pizza chain operator's shares are now trading at approximately 23x estimated full-year earnings. This is remarkably cheap for Domino's and great value considering management has forecast net profit growth of circa 20% in FY 2018.
However, investors snapping up shares today ought to have a bit pf patience. I suspect that its shares may trend sideways until it provides a mid-year trading update which demonstrates that it is on course to deliver on its full-year guidance.
