Unfortunately for growth investors a number of popular and reliable growth shares such as a2 Milk Company Ltd (Australia) (ASX: A2M) and Domino's Pizza Enterprises Ltd. (ASX: DMP) appear to have run out of steam in recent times.
But thankfully there are still some quality options on the local market that continue to race higher and look good value. They are as follows:
Aristocrat Leisure Limited (ASX: ALL)
Although Aristocrat Leisure is best known for the pokie machines that it designs and manufactures, the main attraction to the company for me is its fast-growing digital business and the high levels of recurring revenues it generates. This segment will go into overdrive in 2018 following the acquisition of Plarium for US$500 million. The deal will see the popular Vikings: War of Clans mobile game added to the company's lucrative portfolio.
As well as this, I expect that rising rates in the United States will result in a weaker Australian dollar and favourable currency tailwinds for Aristocrat Leisure. After all, in the first-half of FY 2017 it generated $715.8 million, or 58.8% of its sales, in the Americas region. I suspect the vast majority of this revenue comes from the U.S. market.
Treasury Wine Estates Ltd (ASX: TWE)
Like Aristocrat Leisure, Treasury Wine Estates is another company that would benefit greatly from a weaker Australian dollar. Approximately 42% of its earnings are generated in the Americas region, with the majority of this coming from the U.S. market. I expect these currency tailwinds combined with strong U.S. demand should lead to another year of solid profit growth in the Americas in FY 2018
But it isn't just the U.S. market which is experiencing strong demand. Demand from Chinese consumers continues to rise greatly and is expected to strengthen in FY 2018 organically and as a result of a disappointing harvest for European producers. By my calculation Treasury Wine Estates' shares are changing hands at 33x forward earnings. I don't believe this is too demanding given its current growth profile.
