Are these the 3 best growth stocks money can buy?

Don't be fooled, there's still time to buy companies like M2 Group Ltd (ASX:MTU) and Freedom Foods Group Ltd (ASX:FNP).

Andrew Mudie

Andrew joined the growing team of Motley Fool freelance writers in mid-2013 following years of personal development as a passionate self-taught sharemarket investor. At the time, Andrew was an engineer by trade, writer by hobby, and an investing nerd by passion who spent far too many breaks reading, writing and learning. Andrew’s first investing lesson came with his first stock selection in 2011 when takeover rumours caused a spike and subsequent plunge in the share price of Woodside and then the 21% fall in the market through mid-2011. The next four years of investing saw Andrew dabble in a vast array of strategies until settling on his favourite investment methodology, which is closely aligned with that of the Motley Fool: Fundamentals-based long-term buy-and-hold of great companies at great prices.

Published September 23, 2014 7:57 am AEST

As an investor, I'm constantly on the lookout for new companies to add to my watchlist or portfolio. Unfortunately it's becoming harder to find quality companies that offer a good risk-reward balance after such a strong 18 months.

If sitting with cash isn't an option, then it might be worth looking at your current holdings for companies that could keep rising, even if you're sitting on big gains. The practice is called 'averaging up' and is the opposite of increasing your stake in a company when the share price falls.

I've skimmed over my holdings and my watchlist to find the best three companies that I would be averaging up on at the moment. Here's the details:

Shares in telecommunications group M2 Group Ltd (ASX: MTU) have surged 22% this year and over 500% over the last five years following years of successful acquisitions. The group provides phone and internet services to individuals and businesses around Australia and is building an energy retailing arm that is showing promising growth. With another 8-10% growth forecast for FY2015, M2 is a company worth having another look at.

Freedom Foods Group Ltd (ASX: FNP) hasn't performed quite as well as M2, up just 8% in 2014, but has risen 700% over the last five years. The group manufactures and distributes a range of allergen-free products in Australia, New Zealand and the US. It also distributes Australian milk to China under a range of company and private brands. Freedom Foods looks expensive based on last year's annual report but I believe there's a lot of room to grow in the next five years.

Star performer Domino's Pizza Enterprises Ltd. (ASX: DMP) is a favourite among Australian investors and fast-food lovers because of its tasty pizzas and growth profile. The recent purchase of a swathe of franchises in Japan looks like it will allow the company to keep growing rapidly. The company does appear expensive, trading on a trailing PE ratio of 54 following a 100% rise over the last 12 months, but investors are willing to pay more for growing companies and Domino's is one of the best.

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