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2 quality ASX 200 growth shares high on my watchlist

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is full of quality growth shares that are worthy of being in any portfolio.

There are some shares that I think operate in attractive sectors, with good growth plans, growing profit margins and reliable management.

Here are two of those ideas that are high on my watchlist:

Bapcor Ltd (ASX: BAP)

Bapcor is Australasia’s leading auto parts business with its Burson and Autobarn chains.

I like the auto parts industry because of how defensive it is. Bapcor has been generating growth in good times, but in leaner times people will try to make their car last longer instead of buying a new one – which should mean higher demand for parts.

Burson, which mainly services mechanics, has been growing at a very pleasing rate. Same store sales growth was 4.4% in FY18, the number of stores increased by 10 to 170 in FY18 and the earnings before interest, tax, depreciation and amortisation (EBITDA) margin increased to 14.4% compared to 13.6% in FY17.

Bapcor plans to continue to grow Burson store numbers over the next few years.

Burson is the key driver of profit, but the specialist wholesale segment contributed $38.6 million of EBITDA in FY18 too, which was underlying growth of 16.2%. This segment includes the electrical division, which could play a bigger and bigger role as electrical vehicles become more prevalent.

Despite growing continuing operations pro-forma earnings per share (EPS) by 27% in FY18 and predicting profit growth of between 9% to 14% in FY19, Bapcor is only trading at 22x FY18’s earnings.

Altium Limited (ASX: ALU)

Altium is one of the world’s leading electronic PCB software businesses.

It provides the tools for engineers to design the products of tomorrow. Some of its clients include NASA, Space X, Tesla, Amazon, Google and Apple.

I believe it’s one of the best ways to get exposure to the Internet of Things on the ASX.

Altium continues to win new clients and incrementally upgrade its suite of products.

Management are predicting of a future where there is one dominant business in the electronic PCB software space, so Altium has set another ambitious goal of 100,000 Altium Designer seats before 2025, which would likely see it be that clear number one.

Altium is currently trading at 44x FY19’s estimated earnings.

Foolish takeaway

I think both of these businesses are two of the best growth shares on the ASX.

However, Altium’s recent recovery has made to too expensive for me to buy for now. I’d choose Bapcor for its attractive valuation at the current prices, it also has a decent grossed-up dividend yield of 3.2%.

Another ASX 200 growth share I’ve got my eye on is one of these top stocks which is growing profit every year due to an attractive long-term tailwind.

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Motley Fool contributor Tristan Harrison owns shares of Altium and Bapcor. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia owns shares of Altium. 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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