I’m close to buying these 2 growth shares

Share prices change every day, indeed every minute whilst the stock exchange is open. In a few days or weeks a share price can change so much that it goes from being ‘fair value’ to being quite attractive.

I keep an eye on my favourite growth shares to see if they’ll fall into my value buy zone. If I were investing today, I’d be very pleased to buy shares of these businesses:

BWX Limited (ASX: BWX)

The BWX share price has fallen from above $8 in January to today’s $5. That steep of a drop for the same business can really improve the value.

BWX is Australia’s largest natural beauty brand with its Sukin range of products. It recently bought two other US natural beauty businesses to expand the company. BWX’s first-half report was not as good as investors were hoping for, particularly regarding the acquisitions. Some commentators are accusing management of growing the business too much in a short period of time.

However, the rationale for the buys is still there in my opinion. BWX bought two growing businesses that are going well in the US. Those products can now be sold in Australia and in other international markets. However, the key factor is that it gives Sukin easy access to the huge US market, which could put a rocket under Sukin growth.

BWX is currently trading at 18x FY19’s estimated earnings.

Paragon Care Ltd (ASX: PGC)

The Paragon Care share price has dropped from above $0.90 last year to today’s $0.74. Paragon is a small healthcare business, its plan is to acquire other healthcare device and equipment providers to give it economies of scale whilst growing its customer base.

The roll-up strategy can work well if management execute well, integrate the new businesses effectively and ultimately it grows profit. Some investors seem unsure if the Paragon Care strategy is working at the moment – a lot rests on the second half result as earnings are skewed to the last six months of the financial year.

I like the idea of buying Paragon Care because it has defensive earnings and Australia’s ageing population should mean more patients who need Paragon’s products.

Paragon management will need to ensure that earnings per share (EPS), profit margins and the balance sheet all improve over time to grow the share price.

It’s currently trading at 13x FY19’s estimated earnings.

Foolish takeaway

I think both shares offer very good long-term value at the current prices. If management achieve decent earnings per share growth over the next five years I think they will easily beat the ASX index’s returns.

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Motley Fool contributor Tristan Harrison owns shares of BWX Limited. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia has recommended Paragon Care 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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