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5 growth stocks for 2018

Here are five growth stocks I believe are in for a strong year in 2018:

Aristocrat Leisure Limited (ASX: ALL) had a big 2017, with impressive growth across all four business segments sending the stock price up 53%. 2018 is set to be another interesting year for the gaming company, following recent major acquisitions of social gaming firms Plarium and Big Fish Games.

Digital was already Aristocrat’s fastest growing segment in FY2017; both revenue and earnings growing more than 30% on the previous corresponding period, and the company expects its latest purchases to be earnings before amortisation accretive in the first full year of ownership.

Challenger Ltd (ASX: CGF) is an investment firm that has benefited from the increasing popularity of annuities. Baby-boomers with large superannuation balances, still wary from the global financial crisis, have been attracted to annuities for their steady stream of income; an area where Challenger is a market leader in Australia.

In addition to fostering new sales partnerships with some of Australia’s leading financial advice firms, Challenger has gained exposure to the Japanese market through its relationship with giant MS&AD Insurance Group.

The Webjet Limited (ASX: WEB) share price fell around 20% in November after providing earnings guidance that disappointed the market. Management later elaborated on its outlook statement at its Annual General Meeting and this appears to have calmed investors, as shares recovered somewhat in December.

Webjet expects EBITDA to increase 14% in FY2018 while growth rates in the company’ Business-to-Consumer and Business-to-Business segments are predicted to be well above the underlying industry rates over the next three years.

MNF Group Ltd (ASX: MNF) provides voice communications solutions for Australian retail and wholesale customers, making use of Voice Over Internet Protocol (VOIP) technology. Using VOIP is a much cheaper alternative to traditional telephone networks, especially for international calls, and offers superior capability and flexibility.

MNF has forecast 24% NPAT growth in FY2018, though that figure is based on organic growth only. Considering MNF’s strong financial position which includes surplus cash and little interest-bearing debt, there is plenty of scope to fund increased business, acquisitions, or both.

BWX Ltd (ASX: BWX) is best known for its Sukin range of natural skincare products in Australia, though the brand is also sold overseas in locations including Canada, the UK and parts of Asia.

Recent US-based acquisitions have the potential to open sales channels for Sukin in the United States, and this could be a catalyst for significant growth and share price appreciation.

BWX shares aren’t cheap at around 60x FY2017 earnings per share, through that may still represent value if Sukin can achieve the sort of success in China and the United States that the brand has enjoyed in Australia, where sales rose 43.5% last financial year.

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Motley Fool contributor Ian Crane has no financial interest in any company mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited, Challenger Limited, and MNF Group Limited. The Motley Fool Australia has recommended Webjet Ltd. 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.

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