If you’re interested in adding some growth shares to your portfolio, then I think the three named below could be great options.
I believe all three are well-positioned to deliver above-average earnings growth over the next few years and could generate strong returns for investors.
Here’s why I would invest $3,000 across the three:
Bubs Australia Ltd (ASX: BUB)
The first growth share to look at is this vertically integrated producer of goat’s milk-focused infant formula and baby food products. While I’m not sure whether it will ever be as successful as a2 Milk Company Ltd (ASX: A2M), I do see a lot of similarities. For example, around five years ago a2 Milk Company was a loss-maker and people were questioning the investment proposition. Fast-forward to today and a2 Milk Company is a highly profitable business and growing at an extraordinary rate. Could the same happen with Bubs? Well, after several years of operating at a loss and burning through cash, the company has just become cash flow positive. I’m optimistic this is a sign that it has now reached a scale which will make its operations more and more profitable over the coming years. This could make it a great long term option for growth investors.
Megaport Ltd (ASX: MP1)
Another growth share to consider buying is this elasticity connectivity and network services company. Megaport’s increasingly popular service allows its customers to increase and decrease their available bandwidth in response to their own demand requirements. A good example of this is an airport. It can increase its bandwidth during busy parts of the day and then decrease it when its terminals are quiet. This means the airport doesn’t need to be tied to a fixed service level on long-term and expensive contracts. Demand for its offering has been growing strongly, leading to stellar recurring revenue growth. I expect this trend to continue for some time to come thanks to the cloud computing boom.
PolyNovo Ltd (ASX: PNV)
A final growth share to consider buying is this exciting medical device company. I think it could have a very bright future thanks to its NovoSorb Biodegradable Temporising Matrix (BTM) product. This was developed at CSIRO and is a wound dressing intended to treat full-thickness wounds and burns. It currently has a sizeable $1.5 billion market opportunity, but management is intent on expanding its usage into the hernia and breast treatment markets. If this is successful, it could be very lucrative. Management estimates that these markets would add $6 billion to its addressable market.
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- These are 2 quality ASX shares to buy with $2,000
- Why Polynovo and JB Hi-Fi shares outperformed in FY20
- Why I’d buy and hold a2 Milk shares until 2025
- Top ASX Stock Picks for July 2020
- The top 10 performing ASX shares over the past year
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO, MEGAPORT FPO, and POLYNOVO FPO. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended BUBS AUST FPO and MEGAPORT FPO. 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.
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