Of all the many different types of shares you can invest in, my favourite would have to be growth shares.
These are shares which are expected to grow earnings at an above-average rate for a number of years.
But as great as they are, one big problem with many growth shares is that they trade at exorbitant earnings multiples.
Whilst this isn't a problem if they deliver on expectations, if they fail to deliver their shares can come crashing down to earth with a bang.
The Aconex Ltd (ASX: ACX) share price and the Bellamy's Australia Ltd (ASX: BAL) share price are a great example of this.
Both of these companies have seen their shares fall 52% and 42% in the last 12 months for this very reason.
The good news is that there are a number of growth shares on the Australian share market that I believe are trading on fair earnings multiples.
Here are two to consider:
Thanks to the Aristocrat Leisure Limited (ASX: ALL) share price falling around 11% in the last month, the gaming technology company's shares are changing hands at a touch under 27x annualised earnings. I believe this is a fair price and an opportune time to invest in a company that is on course to grow its earnings per share by a whopping 42% this year.
The Domino's Pizza Enterprises Ltd. (ASX: DMP) share price is another which has taken a tumble in recent times. The pizza chain operator's shares are down approximately 20% since this time last year and trading at 38x annualised earnings. Whilst this may not sound cheap, for Domino's Pizza this is arguably bargain territory. Especially with the company working hard to increase its margins and planning on more than doubling its store footprint over the next eight years.
