Unfortunately when it comes to growth shares the majority of them will be trading on lofty earnings multiples.
Whilst this is ok if the company delivers on the high expectations of the market, it can go terribly wrong if the expected growth fails to materialise.
This is exactly what we saw with Aconex Ltd (ASX: ACX) yesterday. Its share price was almost cut in half after the software-as-a-service company shocked the market with its profit guidance downgrade.
In light of yesterday's events I went searching for growth shares that trade on reasonable multiples. Here are the three that I found:
Capilano Honey Ltd (ASX: CZZ)
The shares of this leading honey producer are changing hands at a little over 14x trailing earnings at present. I'm optimistic that its new Beeotic range and exports into China will help build on last year's strong result which saw earnings per share increase 21% to $1.10. At the current price this could make it a bargain buy in my opinion.
iSentia Group Ltd (ASX: ISD)
A disappointing trading update at its annual general meeting led to this media-monitoring company's share price plummeting 25% in the last three months. Whilst the first-half result is likely to be a disappointment due to the underperformance of its content marketing business, management is confident that it can turn it around. So with its shares trading at under 17x estimated FY 2017's earnings according to CommSec, it could be an opportune time to snap up iSentia shares.
Money3 Corporation Limited (ASX: MNY)
Despite its shares rallying higher by a whopping 65% in the last 12 months, Money3's shares can be picked up for a little under 14x trailing earnings today. The company had a great FY 2016 thanks to the strong performance of its auto loans business. I expect it will be more of the same this year, which I believe makes Money3 an attractive option for investors. Another bonus is that its shares are expected to provide a fully franked 3.2% dividend over the next 12 months.
