It's getting harder to make the case to buy blue-chip growth stocks on our market given the lacklustre outlook for global growth, but there are three exceptions S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index.
Our market has been on a roller coaster ride of late as growing signs of a possible global recession is dampening risk appetite.
This is why defensive stocks like toll road operator Transurban Group (ASX: TCL) have been gaining favour of late, but don't count growth stocks out as there are some in this group that looks like a bargain in my book even as they are trading closer to the bottom end of their 52-week trading range.
A good investment bet
The first is gaming machine maker Aristocrat Leisure Limited (ASX: ALL). Investors aren't quite willing to bet that the company will post strong growth from its social gaming and US operations – or at least not enough to justify its FY19 consensus price-earnings multiple that's hovering close to 20 times.
That isn't expensive in my view for a company like Aristocrat, although it was trading at a much higher multiple a few months back before the Aristocrat share price started underperforming.
The latest note from Macquarie Group Ltd (ASX: MQG) analysing the performance of 47,000 gaming machines in Victoria, New South Wales and Queensland is bolstering my confidence that Aristocrat won't disappoint when it hands in its half year results in May.
The broker found that Aristocrat's Welcome to Fantastic Jackpots, Dragon and Lighting games are dominating the floor averages (floor space at pubs with gaming machines).
Steeling a bargain
Another underperforming stock worth looking at is steel product maker BlueScope Steel Limited (ASX: BSL).
Shareholders are suffering from metal fatigue brought on by worries of shrinking steel price spreads (margins) and the slowing US economy.
These worries look overblown. Steel spreads are stablishing while experts do not believe US growth is about to stall or reverse despite what the bond market is signalling.
This isn't to say there isn't a risk to BlueScope's earnings but with the stock trading at 8.8 times to FY20 consensus net profit, a lot of bad news seems to be already in BlueScope's share price.
In a slippery hole
Finally, underperforming oil and gas engineering group Worleyparsons Limited (ASX: WOR) looks like another bargain to me.
The stock was sold off along with energy stocks when the oil price was falling, but it's still lagging the sector even as the outlook for oil brightened.
The Worleyparsons share price also shouldn't quite be as volatile given that its earnings are not directly tied to the fickle commodity price.
The stock is cheap and is worth putting on your radar for 2019.
