Over the long-term the best way to increase wealth is to choose growth shares and hold them for the long-term. Low-growth shares just don’t compound wealth as quickly, which really makes a difference over time.
Here are three growth shares I hope will beat the market over time:
Challenger Ltd (ASX: CGF)
Challenger is Australia’s leading annuity provider. The business just reported an underwhelming FY18 result that was at the bottom of its own guidance.
However, the long-term growth in demand of annuity products is predicted to rise considerably over the coming years. This is partly due to the rising population of people entering retirement, the number of over-65s is expected to rise by 70% over the next two decades. The other reason is that the government recently announced a rule requiring superannuation funds to offer a guaranteed income product to members.
Challenger is trading at 15x FY19’s estimated earnings.
Costa Group Holdings Ltd (ASX: CGC)
Costa is one of Australia’s largest food growing businesses. It produces berries, citrus fruit, avocadoes, tomatoes and mushrooms.
The company is growing in Australia, Asia and North Africa, giving it several avenues for growth. Changing diets, Asian demand and food scarcity could all increase the price of food in the years to come. Costa is predicting underlying profit will grow by around 25% in FY18.
It’s currently trading at 27x FY19’s estimated earnings.
Citadel Group Ltd (ASX: CGL)
Citadel describes itself as a leading technology and software business that specialises in secure enterprise information management. Its main clients are in the health, national security, defence and education sectors.
For example, its health solutions support 50,000 daily transactions and holds 27 years’ worth of data. Technology is increasingly important for people to do their job more efficiently.
Citadel has long-term contracts generating high levels of recurring revenue and good organic growth. Citadel could be a good steady growth share over the coming years.
It’s currently trading at 23x FY19’s estimated earnings.
All three shares look like quality growth shares to me and I hope they all beat the market comfortably over the coming years. At the current prices I’m drawn to Challenger the most due to its low price and large long-term growth potential.
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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited and COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended Challenger Limited and COSTA GRP FPO. The Motley Fool Australia owns shares of Citadel Group 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.