With many high PE growth shares coming under pressure as bond yields widen, I thought I would look at a few options that provide growth at a reasonable price (GARP).
Three that I feel are worth considering are as follows:
Aristocrat Leisure Limited (ASX: ALL)
Late next month this gaming technology company is due to release its full year results. A recent note out of Goldman Sachs reveals that it expects earnings per share of $1.19, which is approximately 40% higher than a year earlier. Looking further ahead, in FY 2019 the broker expects the company’s earnings to grow a further 26% to $1.50 per share. Based on this estimate, Aristocrat Leisure’s shares are currently priced at 18x FY 2019 earnings. Given the strength of its core business and the long-term growth potential of its digital business, I think this is a great price to pay for its shares.
Bellamy’s Australia Ltd (ASX: BAL)
This year this infant formula company’s shares have sunk notably lower because of delays to it achieving the CFDA accreditation required to sell Chinese labelled products on the China mainland. This selloff has left Bellamy’s shares trading at just under 18x estimated forward earnings. This is based on a note out of Goldman Sachs at the end of August, forecasting earnings per share of 47 cents in FY 2019. While I do think there are downside risks to its forecasts the longer CFDA accreditation is delayed, I still feel that the risk/reward on offer here is compelling. Especially for patient investors that can ride through the current volatility.
Webjet Limited (ASX: WEB)
I think this leading online travel agent could be a great option for growth investors. Its shares have recently come under pressure after a hot British summer and the World Cup meant its UK partner Thomas Cook downgraded its profit guidance. This has led to Webjet’s shares falling 22% from their 52-week high and wiping out all their post-earnings gains in the process. While this is disappointing for shareholders, I think it is a buying opportunity for the rest of us. Especially now its shares are trading at around 23x estimated forward earnings.
Finally, here's another growth share trading at a reasonable price.
Discover why this legendary Australian stock-picker just issued a “Double Down” buy alert to his exclusive group of insiders… and why he’s convinced this might be the single most attractive entry point for years to come.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.