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3 food shares generating tasty growth

Food is one of our fundamental needs as humans. You can’t go long without eating, so it’s fair to say the food industry is somewhat of an essential, perhaps defensive, sector.

The ASX has a lot of different food companies on the boards, but none all of them are steadily growing.

Here are three quality food shares that are growing each year:

Costa Group Holdings Ltd (ASX: CGC)

Costa is one of Australia’s largest growers of fresh food. It has five core pillars of growth, they are tomatoes, citrus fruit, berries, mushrooms and avocadoes.

It has done very well for shareholders since listing in July 2015, with the share price growing from $2.15 to $7.16.

Even though the company has already done well I think that there could be a lot more growth to come with both organic growth from its current farms and acquisitions to expand its food empire which operates in three continents. Costa has been busy making avocado acquisitions, millennial demand for the avo on toast is generating strong earnings for the sector.

Costa is predicting underlying growth of 25% for FY18 and is trading at 24x FY19’s estimated earnings.

Tassal Group Limited (ASX: TGR)

Tassal is Australia’s largest seafood company with its salmon farms in the waters of Tasmania and its wholesale seafood operation.

It has resolved its salmon farm health worries and is now focusing on growing the business. It has achieved consistent growth over the past five years and will hopefully keep growing as demand for salmon continues in Australia and overseas.

Tassal is currently trading at 12x FY19’s estimated earnings with a handy grossed-up dividend yield of 5.87%.

Domino’s Pizza Enterprises Ltd. (ASX: DMP)

Domino’s is the largest pizza business in Australia and it’s also a franchisor in other populous countries like Japan, Germany, the Netherlands and France.

The share price has almost halved since its 2016 all-time high, making the shares seem much more attractive. The growth rate has slowed down and the CEO does appear to have some issues to solve, but that doesn’t change the fact that Domino’s is still growing and has plans to increase its outlet numbers and profit margins.

Domino’s is currently trading at 23x FY19’s estimated earnings.

Foolish takeaway

All three shares should be able to grow their profit for the long-term. Tassal is clearly the cheapest, but Costa could be the one to generate the biggest returns because of its international growth plans.

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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 Domino's Pizza Enterprises 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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