3 essential stocks for the growth investor: Nufarm Limited, Boral Limited and Cochlear Limited

Here's why Nufarm Limited (ASX:NUF), Boral Limited (ASX:BLD) and Cochlear Limited (ASX:COH) could be top notch growth plays.

Peter Stephens

Having held various senior management positions in the manufacturing sector, Peter founded his own manufacturing company in 1996 that was subsequently sold in 2007. Meanwhile, his passion for investing remains strong and he couples this with writing for The Motley Fool as a freelancer. His investment style is value-oriented, focusing on company fundamentals as well as assessing the strength and presence of a competitive advantage. While above-average growth prospects remain very attractive, a greater focus on dividends has crept in since Peter became a part-time retiree in 2007.

Published August 21, 2014 7:43 am AEST

Although the ASX is once again at six-year highs, having recovered from its 'winter dip', there are still a number of stocks out there that offer growth at a reasonable price. Indeed, they may not trade on super-cheap valuations but, when their strong growth prospects are taken into account, they seem to offer good value and could make a positive contribution to your portfolio. Here are three such examples.

Nufarm Limited

2014 has been disappointing thus far for investors in Nufarm Limited (ASX: NUF), with the crop protection company seeing its share price rise by 2%, which is less than the 5% gains of the ASX. However, the future could be a lot different for Nufarm and its investors. That's because the company is forecast to grow earnings by 25% over the next two years, which is very impressive and could be the catalyst for share price increases. However, Nufarm isn't priced for growth, since its P/E ratio is just 13.9, which is less than the ASX's 16.3, and means that shares in the company trade on a PEG ratio of just 0.6. Growth at a reasonable price indeed.

Boral Limited

Unlike Nufarm, shares in building materials company Boral Limited (ASX: BLD) have performed well in 2014, being up 11% year-to-date. However, they could have further to run, since the company is forecast to deliver strong growth numbers over the next two years. The company's bottom line is all set to rise by 40.3% over the next two-year period, which makes a P/E of 26.4 look reasonable given the potential growth of earnings per share. Indeed, Boral trades on a PEG of just 0.7, which is well below the ASX's PEG of 2.2, and provides evidence that investors can buy growth at a reasonable price.

Cochlear Limited

Meanwhile, shares in Cochlear Limited (ASX: COH) have gained 18% during the course of 2014, easily beating the ASX. At first glance, they may appear to be hugely expensive, since they trade on a P/E ratio of 39.2. That's an incredible 140% higher than the ASX's P/E of 16.3.

However, where Cochlear has potential is with regard to its growth prospects, with the company forecast to increase its bottom line by 35.8% over the next two years. This means that Cochlear could have more upside potential, since its PEG ratio is a very appealing 1.1. Cochlear could prove to be a sound investment at current price levels.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.