The prices of shares are always going up and down thanks to an ever-changing group of buyers and sellers. This liquidity can turn a share from expensive to good value in the space of a few days or weeks. Indeed, over the last couple of months the share market has fallen by a sizeable amount because of rising interest & bond rates. If I were lucky enough to be given $10,000 to invest, this is how I’d do it: Challenger Ltd (ASX: CGF) Australia’s leading annuity business’ share price has fallen substantially during 2018 due to the rising interest rates,…
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The prices of shares are always going up and down thanks to an ever-changing group of buyers and sellers.
This liquidity can turn a share from expensive to good value in the space of a few days or weeks.
Indeed, over the last couple of months the share market has fallen by a sizeable amount because of rising interest & bond rates.
If I were lucky enough to be given $10,000 to invest, this is how I’d do it:
Challenger Ltd (ASX: CGF)
Australia’s leading annuity business’ share price has fallen substantially during 2018 due to the rising interest rates, along with the CEO announcing his retirement recently.
I think the current share price is a very fair price to buy shares because it’s trading at under 14x FY19’s estimated earnings. This seems cheap for a business that is growing underlying profit by at least high single digits every year.
I am particularly drawn to Challenger because it has ultra-long-term growth potential. Its main client base is the retiree population, which is projected to grow by 40% over the next 10 years and by 70% over the next 20 years.
Combined with its current grossed-up dividend yield of 5.3%, it looks like a long-term market-beater to me at this price.
Paragon Care Ltd (ASX: PGC)
Paragon Care is a medical device, equipment and product distributor which it sells through a single online platform to customers like hospitals and aged care facilities.
I like that it is a generalised play on the healthcare industry which is both defensive and a growth sector. People don’t get sick according to economic cycles, but we will pay what it takes to remain alive healthy and healthy.
The more products that Paragon can sell to its customers the bigger its economies of scale become.
Paragon has increased its dividend each year since 2013, it’s trading at under 10x earnings with a grossed-up dividend yield of 6.7%.
MNF Group Ltd (ASX: MNF)
MNF is a leading voice over internet protocol (VoIP) business with many large private and public clients including Skype and Uber.
MNF is generating good organic growth, has plans to expand in Singapore and is growing an over-50s regional telco brand called Pennytel. It has several growth levers.
Its share price has been hurt along with most other growth shares in recent times, however the market seemed unimpressed with its profit guidance for the next two years suggesting earnings per share (EPS) could grow by at least 25% by FY20.
MNF is trading at under 24x FY19’s estimated earnings with a grossed-up dividend yield of 2.9%.
Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE)
Asia is the fastest-growing region economically, particularly India and China. Some of the GDP numbers may be a tad inflated and some Asia businesses may not be the most honest on the planet, but it could be an unwise move to ignore the region entirely.
I’m not sure which country or which business is the best, so the right move could be simply to invest in an Asian index fund like this one offered by Vanguard.
You get exposure to 850 Asian companies based in China, Hong Kong, Taiwan and India, among other countries.
According to Vanguard, this index is growing earnings at more than 10% – twice the rate expected of ASX businesses this year. It also comes with a handy 2.9% dividend yield and is trading with a price/earnings ratio of under 11.
These are four of my favourite growth share ideas right now. It’s hard to pick a favourite, each has their own merits. If I had to narrow it down to two it would be Paragon and Challenger – I already own these two in my portfolio for the long-term, so I’d be topping up my holding.
Other shares I’d like more of are two of these rock-solid ASX winners that are growing their dividends and profits every year.
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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited and Paragon Care Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited and MNF Group Limited. The Motley Fool Australia has recommended Paragon Care 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.