It’s getting harder these days to find good value growth shares. Investors need to be careful not to overpay for growth stocks, but also not to venture into stocks that are too speculative just for the sake of trying to find growth.
With volatility increasing there are a few opportunities starting to appear in my opinion. Here are four ideas I think will beat the Australian index over the medium-term:
WAM Microcap Limited (ASX: WMI)
WAM Microcap is one of the latest listed investment companies (LICs) to join the Wilson Asset Management stable.
It focuses on the smallest end of the market where few regular investors or analysts look. So, far the investment team have done very well as the portfolio has grown by 25.1% in FY18, far outperforming the other WAM LICs.
Small caps are the businesses that are going to become the next household names, so it makes sense to hunt in this area.
It has just started paying a dividend and could grow its yield to be similar to the other high yields in time.
National Veterinary Care Ltd (ASX: NVL)
National Vet Care is a fast-growing vet business that is acquiring other veterinary clinics to expand its network and grow.
The business is using its own cash and debt facilities to add at least five or six clinics a year to the business, which is rapidly growing revenue and profit higher. In the half-year report to 31 December 2017, the revenue and statutory net profit after tax (NPAT) both grew by just under 28%.
I believe the continued acquisitions over the coming years will send the share price higher at a market-beating rate.
Zenitas Healthcare Limited (ASX: ZNT)
Zenitas is a small cap healthcare company that is looking to save governments and patients money by avoiding the high-cost care of hospitals. Zenitas has three segments to its business, it has primary, allied and home care.
I think the home care section of the business is promising because patients would prefer to be treated in their homes if the option was available, I know I would prefer that.
In my opinion, Zenitas is one of the most promising small cap healthcare stocks.
InvoCare Limited (ASX: IVC)
InvoCare is Australia’s leading funeral operator, which sounds quite morbid. It is morbid, but I think it has a promising future.
It has defensive earnings because a number of Australians sadly die each year, InvoCare has a variety of brands to attract families at various price points.
However, the key reason why I think InvoCare is attractive is that Australia’s death rate is expected to keep growing over the coming decades, which should be a boost to InvoCare.
I believe that all four stocks will beat the market over the coming years, which is why I’m a shareholder of all four businesses. I think all four are worth buying today, as their share prices have declined in recent weeks.
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Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited, NATVETCARE FPO, WAM MICRO FPO, and Zenitas Healthcare Ltd. The Motley Fool Australia owns shares of NATVETCARE FPO. The Motley Fool Australia has recommended Zenitas Healthcare 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 Scott Phillips.