If you can be patient for the long-term and be brave through market volatility then investing for growth is the best for you over time due to the compounding of profit.
The problem can be buying good growth shares at the right price. Altium Limited (ASX: ALU) has very attractive growth prospects, but its valuation reflects that potential!
I think it's important to go for growth at attractive value, that's why I'm interested in these two shares:
WAM Microcap Limited (ASX: WMI)
This is a listed investment company (LIC) run by the high-performing team at Wilson Asset Management. When WAM Capital Limited (ASX: WAM) was launched it focused on smaller shares, but now it's so large it has to aim for larger shares.
WAM Microcap is focused on businesses with market capitalisations under $300 million at the time of acquisition. This is an attractive hunting ground because small shares have much more room for growth before they hit a growth ceiling.
Over the past year WAM Microcap's portfolio has returned 30.1% before fees and expenses. Not every year will be this good and some years could be very volatile. However, over the long-term this could be the highest-performing LIC out of the WAM group.
National Veterinary Care Ltd (ASX: NVL)
National Vet Care is Australia and New Zealand's second largest vet business. Its main strategy is to expand its network by acquiring additional veterinary clinics. If the business can maintain profit margins and always has a decent balance sheet it should be reasonably successful.
Vets offer a fairly defensive earnings profile because they're like hospitals for pets – we'll spend quite a bit of money to keep our furry companions alive and healthy.
The recent acquisition of Pet Doctors added 23 clinics to its New Zealand network, which had been achieving good organic revenue growth and profit margin growth by itself. National Vet Care thinks FY19 revenue will be 40% higher and that the acquisition will be earnings per share (EPS) accretive this year.
Until National Vet Care reaches around 150 clinics, I think it has plenty of growth potential remaining.
Foolish takeaway
Both shares are attractive to me at the current valuation. National Vet Care is expecting a bumper year and WAM Microcap has already proven that small caps can create big returns in a shorter-term timeframe. Both are high on my potential-buy list at the moment.
