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I think these 3 growth shares are trading cheaply

Shares are always changing price, which changes how attractive they are as investments.

It’s our job as investors to look through the noise and identify businesses that are trading at attractive value to us.

If I were going to buy growth shares today, these are three that I’d be very interested in:

National Veterinary Care Ltd (ASX: NVL)

National Veterinary Care is the second largest veterinary business in Australia and New Zealand. It has rapidly increased its network of clinics, which now numbers in the 60s.

Management have a loose aim of adding around six more clinics each year. If 100 is a minimum target then it has several years of additional acquisition growth to go.

I really like the pet industry because of the defensive and recurring revenue. Around two thirds of cats and three quarters of dogs visit the vet each year. National Vet Care also has an annual pet membership program which increases its revenue retention rate.

National Vet Care is trading at around 22x FY18’s estimated earnings.

1300 Smiles Limited (ASX: ONT)

1300 Smiles is a dental practice business that is similar to National Vet Care in a number of ways. It has an affordable $1 a day dental plan for people, which has a number of inclusions.

It is also steadily acquiring other dental practices to add scale and improve its margins and geographical reach.

1300 Smiles is currently trading at 21x FY17’s estimated earnings.

Greencross Limited (ASX: GXL)

Greencross is another pet business which is also benefiting from Australia’s growing pet industry.

It’s different to National Vet Care in that it has its Petbarn retail network. This is a positive and a negative. It’s a positive because Greencross is co-locating vets inside the Petbarns which saves on costs and should boost revenue through cross-selling. It’s a negative because retail is a low-margin industry and online-only players could hurt the profit in time.

However, Greencross is countering this by increasing its own-brand sales and also ramping up its online sales with the click-and-collect service.

Greencross is currently trading at 14x FY18’s estimated earnings.

Foolish takeaway

I believe all three shares are trading at attractive value for how much they could grow over the coming years. At the current prices I would go for National Vet Care because it’s a lot smaller and therefore it can grow a lot more compared to Greencross.

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Motley Fool contributor Tristan Harrison owns shares of Greencross Limited and NATVETCARE FPO. The Motley Fool Australia owns shares of and has recommended Greencross Limited. The Motley Fool Australia owns shares of NATVETCARE FPO. The Motley Fool Australia has recommended 1300SMILES 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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