Whilst I believe that the Australian share market is home to a great number of growth shares with enormous potential, many of them trade on sky-high multiples that puts them in the high risk category.
Fortunately, not all growth shares trade at such premiums. In fact, I think the two shares listed below trade at attractive prices given their respective growth profiles.
Here's why I think they would be great investments in October:
BWX Ltd (ASX: BWX)
Thanks to the continued success of its Sukin skincare range and its Mineral Fusion acquisition, management previously advised that it expected EBITDA growth in FY 2018 to comfortably exceed the 30.7% increase achieved in FY 2017.
Since giving this guidance the company has acquired Nourished Life for an initial consideration of $20 million plus a potential earn out. This acquisition is expected to add a further $4 million to EBITDA in FY 2018, which alone is the equivalent of a 15% increase on FY 2017's figure.
I estimate that BWX will deliver EBITDA of approximately $39 million in FY 2018, up almost 48% on last year. With its margins increasing strongly, net profit is likely to grow at an even quicker rate. I believe this more than justifies the 32x trailing earnings that its shares trade at today.
Webjet Limited (ASX: WEB)
In FY 2017 this online travel agent reported diluted earnings per share from continuing operations (excluding Thomas Cook) of 33.4 cents. This was an increase of almost 30% on the 25.8 cents per share it reported a year earlier.
This means that its shares are changing hands at approximately 33x earnings today. Whilst this is a premium over the market-average, I believe it is very reasonable given its current growth profile.
While the company won't provide FY 2018 guidance until its annual general meeting in November, so far in FY 2018 it has experienced bookings growth ahead of expectations. As of its full-year results release, Webjet had seen B2C bookings up 25% on the prior corresponding period and B2B bookings up a massive 78% on the prior corresponding period.
In my opinion, this strong start could be a sign of another record-breaking year for the online travel agent.
