Missed out on Seek Limited’s 54% gain? We’re hunting hot growth stocks

Missed out on SEEK Limited's 54% gain? Try these hot growth stocks

Strong gainers could be right in front of us.

Darryl Daté-Shappard

I started investing after finding a copy of Peter Lynch's "Beating the Street" in the English book section of a library in Japan, where I was living at the time in 1997. Seeing that regular people can find investment ideas just as easily as professionals, I used the philosophy of that book to invest in stocks in Japan, and later in Australia after moving in 2001. I also have experience in property investing, and went on to complete my masters degree in Applied Finance at QUT in Brisbane. I follow the investment style of Peter Lynch, Phillip Fisher and Warren Buffett-- knowing what you invest in, doing your homework to keep up with a stock's story and holding a healthy skepticism of what the stock market calls "value".

Published May 20, 2014 5:53 am AEST

What: Jobs classifieds website SEEK Limited (ASX: SEK) has given its shareholders a 54% gain in share price in the last twelve months. In comparison, the S&P ASX 100 Index (ASX: ^XTO) was up a mere 6.4% during the same time. What a wide gap.

So What: The company hasn't been a secret. A great number of job seekers use it every day to find employment and it has been a market-leading business for a number of years. Possibly, the seemingly high price/earnings ratio put some investors off from buying, but high growth stocks attract premiums.

Now What: You want to look for market leaders in potentially high growth, high margin industries similar to Seek. If there is still space for the company to grow into, then many times "winners keep on winning".

Here are three stocks that have built a strong market niche or are expanding into growth opportunities.

G8 Education Ltd (ASX: GEM), the childcare centre operator, has raised its underlying net profit almost eight times since 2010. It is acquiring childcare centres at a high rate in a fragmented industry that is mostly made up of single, private owners. If it can manage its growth well, it could expand all across Australia.

Beach Energy Limited (ASX: BPT) is an oil and gas company with its main operations in the Cooper-Eromanga Basin in SA. It has some amazing oil discoveries in the Basin that are producing more than it originally projected. Interim underlying net profit catapulted from $61 million in FY2013 to $158 million in FY2014. It also is developing unconventional gas that can be sold on to the LNG export market.

REA Group Limited (ASX: REA) has the number-one property listings website, realestate.com.au. The growth doesn't seem to be letting up. Net profit has more than doubled in the last three years and it is adding on new listings services that generate good margins. International expansion is opening up more growth prospects.

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