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2 growth stocks I want to buy for my portfolio

The best way to beat the market over the long-term is to invest in growth stocks that are growing at a fast rate, at least by double digits each year.

Sometimes you can’t catch the best shares at an early stage, perhaps they were just too risky at the time. But, many investors make the mistake of thinking that growth shares are done growing after a few years. Think how much the Amazon, Facebook and Alphabet (Google) share prices have grown over the past three years even though they have all been global businesses for at least a decade.

That’s why I’m closely watching the following three shares:

REA Group Limited (ASX: REA)

Over the past five years the REA Group share price has grown by 172%, yet in just the past year the share price has grown by 28%, that’s even after a decade of incredible growth.

REA Group is the owner of Australia’s leading property portal website, realestate.com.au. The business has strong pricing power because property vendors will always want to make sure they are selling on the most-visited site by buyers. Therefore, REA Group can increase prices with little detrimental effect.

It’s a high-quality company and it has made a number of key investments into property sites based overseas in regions like South East Asia, India and the US. It’s possible that any one of those investments could turn into a business as big as the Australian one because of how large the populations are in each region.

REA Group is currently trading at 30x FY19’s estimated earnings.

Costa Group Holdings Ltd (ASX: CGC)

Since listing in mid-2015 the Costa share price has gone up by 235%. In the past year the Costa share price has gone up by 66%.

Costa is one of Australia’s largest food-producing companies. It has five main pillars of fresh food, it grows berries, tomatoes, mushrooms, citrus fruit and avocadoes.

Economies of scale, a growing global population and food price inflation should all lead to increasing profit for Costa. It’s expanding in Australia, China and North Africa – more farms should be a good thing for the company.

It has a pleasing habit of beating or upgrading its guidance, which could continue in the coming years.

Costa is currently trading at 24x FY19’s estimated earnings, which seems like a reasonable price to pay for a business growing at a double digits.

Foolish takeaway

Both of these companies have been on my radar for a long time. I wish I had bought sooner, but I may add Costa to my portfolio in the near future and buy more if it shows any price weakness.

Until I buy Costa (or REA Group), I will look to buy one of these top growth stocks.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended REA Group Limited. 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.

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