Growth at a reasonable price, also known as GARP, is an investment strategy that seeks to combine the principles of both growth investing and value investing to select shares.
I think there are a number of great examples of GARP on the Australian share market right now. Three to consider are listed below:
Aristocrat Leisure Limited (ASX: ALL)
This leading gaming technology company's shares are currently changing hands at 19x estimated forward earnings. I think this is great value given the company's positive long-term outlook thanks to the leading position of its pokie machine business and the massive market opportunity of its mobile and social gaming business. The latter business is the one that excites me most. At the end of FY 2018 the segment had 8.1 million daily active users and was generating significant recurring revenues from them.
Helloworld Travel Ltd (ASX: HLO)
Helloworld is an integrated travel company which I think both growth and value investors ought to take a closer look at. Its shares are currently trading at a lowly 14x estimated forward earnings after a recent pullback in its share price. I think this makes its shares very attractive, especially given how management expects the company to deliver full year EBITDA growth of between 16.5% and 22.7% in FY 2019. In addition to this, Helloworld's shares currently offer a trailing fully franked 4.2% dividend.
Webjet Limited (ASX: WEB)
Whilst Webjet's shares are not trading on as low an earnings multiple as the other two, I believe it is low relative to its growth prospects. Webjet's shares are trading at 23x estimated forward earnings at present, which I believe is cheap considering management recently revealed that it was on track to achieve EBITDA of at least $120 million in FY 2019. This will be a 37% increase on last year's EBITDA of $87.4 million. And with management confident that its bookings growth will continue to outpace that industry average by some distance over the medium term, I expect similarly strong growth over the next few years.
