The Australian share market may have pulled back a touch in recent days due to trade war concerns, but I think many investors would agree that finding fast-growing shares at a reasonable price remains a difficult task.
However, whilst it may not be easy, if you look hard enough you’ll see that there are some quality growth shares trading at attractive levels.
Three which I think provide a compelling risk/reward right now are listed below. Here’s why I like them:
Aristocrat Leisure Limited (ASX: ALL)
Aristocrat Leisure is a gaming technology company which I think would be a great option for growth investors. Over the last three years the company has grown its earnings by an average of 23.50% per annum. This strong form has continued in FY 2019 with the company reporting a 29.8% increase in first half operating revenue to $2,150.3 million and a 16.8% lift in normalised first half EBITA to $644.4 million. Despite this, its shares are changing hands at under 22x estimated full year earnings. I think this is cheap given its strong core business and exposure to the rapidly growing digital and social gaming market which I expect to underpin further solid growth over the medium term.
Bingo Industries Ltd (ASX: BIN)
Bingo Industries is one of Australia’s leading waste management and recycling companies. Thanks to a combination of population growth and synergies from its Dial a Dump Industries acquisition, I believe it is well-placed to bounce back strongly from a disappointing FY 2019. One broker that expects this to be the case is Morgans. A recent note reveals that its analysts expect Bingo to deliver earnings per share of 6 cents this year and then 10 cents per share in FY 2020. This means the company’s shares are trading at under 18x estimated FY 2020 earnings.
Webjet Limited (ASX: WEB)
One of my favourite growth shares on the Australian share market is this online travel agent. I believe its increasingly popular B2B and B2C brands are well-placed for strong long-term growth due to the continued shift to online travel booking. I’m not alone in thinking this way. Late last month analysts at Credit Suisse retained their outperform rating and $17.00 price target on this online travel agent’s shares. According to the note, the broker expects earnings per share of 66.2 cents this year and then 98.2 cents in FY 2020. If it achieves this, it will mean you can pick up Webjet’s shares at under 15x estimated FY 2020 earnings right now.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. 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.