Because I have a higher than average tolerance for risk, I’m a big fan of growth shares and you’ll find many in my portfolio.
But in order to maintain a reasonably balanced portfolio, I can’t buy all the growth shares that I would like.
However, three candidates for my next purchase are listed below. Here’s why I’m interested in buying them:
A2 Milk Company Ltd (ASX: A2M)
This infant formula and dairy company’s shares have come under a spot of selling pressure over the last couple of months and are down 25% from their 52-week high. Investors hit the sell button in a panic after a2 Milk Company’s explosive growth just wasn’t quite as explosive as some had hoped. I think the selloff has been an overreaction and has created a buying opportunity for patient investors. As I mentioned last week, Goldman Sachs expects the company to grow earnings by a compound annual growth rate of 53% through to FY 2020. I think this makes its shares good value at 33x estimated FY 2019 earnings.
Aristocrat Leisure Limited (ASX: ALL)
I am a big fan of this gaming technology company and believe it could be the best growth share on the local market at this point. This is largely down to management’s decision to push into the digital gaming market with two sizeable acquisitions. The good news is that this decision appears to be paying dividends. In its last update the company revealed that it now had a massive 8.3 million daily active users of its digital segment, contributing significant recurring revenues. I believe that this fast-growing digital segment will complement its strong core business and lead to stronger-than-average earnings growth over the coming years.
Webjet Limited (ASX: WEB)
Another growth share on my shopping list is this online travel agent. I’m a big fan of the way management positioned its numerous brands to achieve bookings growth well ahead of the industry average over the last couple of years. The good news is that management appears confident this can continue over the medium term, putting Webjet in a position to grow its top and bottom lines at a strong rate for the next couple of years at least.
Three more growth shares that are on my shopping list are here. Here's why I think they are buys.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Webjet 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.