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 three of those ideas that are high on my watchlist:
Bapcor Ltd (ASX: BAP)
Bapcor is Australia and New Zealand’s leading auto parts business, with its nationwide chains of Burson and Autobarn outlets.
FY18 was an excellent year with continuing operations pro forma earnings per share (EPS) growing by 27%. The dividend was increased by 19.2%, resulting in a conservative dividend payout ratio of only 50% of underlying earnings.
I am particularly impressed by Bapcor’s ability to achieve strong same store sales growth every year. In FY18 Burson same store sales grew by 4.4%. This is particularly useful with a growing number of stores and rising profit margins.
Bapcor is now expanding in the trucks parts industry and also starting an Asian chain of Bursons – it has plenty of growth potential, even after years of the growth it has already achieved.
Altium Limited (ASX: ALU)
Altium is one of the world’s leading electronic PCB software businesses and plans to become the leader over the next decade.
Management are aiming for 100,000 Altium designer seats, which should mean it has achieved market domination, similar to how Microsoft cornered the Office software market.
It has a very impressive list of clients including Tesla, Space X, Apple, Google, Amazon, Microsoft, Toyota and BMW, among many others.
Altium has been one of the best growth shares on the ASX over the past five years. Optimism is boosting the valuation at the moment, it’s trading at 44x FY19’s estimated earnings now. However, it remains one of the best ways to get exposure to the Internet of Things tailwind.
REA Group Limited (ASX: REA)
REA Group is Australia’s biggest property portal business. It operates realestate.com.au, realcommercial.com.au and a few other smaller ones.
I’m not confident about the short-to-medium-term for property prices, but I do like the idea of owning a business that benefits from how much vendors are willing to pay to advertise their property.
REA Group has suggested that vendors are paying for the higher-priced ads to attract as many potential buyers as possible in this subdued property market.
In the long run, REA Group’s many international investments could turn out to be sizeable profit segments.
It’s currently trading at 30x FY19’s estimated earnings.
All three of these businesses are quality ASX 200 growth shares. Altium’s rise today has sadly taken it some distance away from a price I could consider buying shares.
However, Bapcor and to a lesser extent REA Group, are trading at attractive value and I’d be happy to buy a few shares at today’s prices.
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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. The Motley Fool Australia has recommended REA Group 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.