2020 is only a couple of months away and investors are starting to become more confident that growth may return to the global economy.
It could be a good time to identify growth shares that could be strong performers in 2020 and beyond, like these three:
Bapcor Ltd (ASX: BAP)
The auto parts business has seen its share price rise nicely since the middle of the year, Bapcor’s shares have gone up almost 30% in FY20 so far.
But I believe there could be more good returns to come. Organic growth continues in Australia and New Zealand with solid same store sales growth and growing store numbers of Burson and its other businesses. The recovery of the housing market could also be a good thing for Bapcor.
I’ve been pleased to see its expansion into the truck parts space with a few targeted acquisitions. Earnings diversification is a good tactic.
Bapcor is looking to grow in Asia which could be a very good growth runway for the next five to ten years if the stores are reasonably profitable.
Electric vehicles are a long-term risk but I think Bapcor’s valuation reflects that potential downside.
Webjet Limited (ASX: WEB)
The Webjet share price has fallen heavily since May and the collapse of Thomas Cook hasn’t helped things.
But excluding Thomas Cook, Webjet said that WebBeds total transaction value (TTV) was up 50%. Indeed, all the travel shares on the ASX are reporting good growth in the corporate travel sector.
I think Webjet has an excellent medium-to-long-term future and it’s the type of business that benefits substantially from network effects as it grows.
FY20 isn’t going to be a great report due to the Thomas Cook losses, but looking to FY21 and beyond the growth potential looks very compelling to me.
Altium Limited (ASX: ALU)
The Altium share price has dropped about 15% in around two months on concerns about WiseTech Global Ltd (ASX: WTC) and technology valuations generally.
But, Altium is one of the tech businesses that’s actually generating excellent profit growth and free cash flow already. It isn’t like one of those tech companies that’s losing money with little hope of ever turning a profit.
Altium’s success is linked to the growth of the ‘Internet of Things’. It’s a tailwind that’s not going to go away – that’s why Altium is predicting that its revenue can reach US$500 million by 2025 if it can achieve market leadership.
I think that Altium is by far the best business of the three, but Webjet is probably trading at the best valuation for market-beating returns over the next three years.
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Motley Fool contributor Tristan Harrison owns shares of Altium. 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 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.