The initial thought to actively picking out a growth stock from a pool, is to determine the purpose of one’s investment in line with how the investor wants to shape up the growth portfolio. It’s difficult to find stocks with enormous growth potential while focusing on prices that merely offer cheap investments, rather than those with high price and still having a chance for rapid price appreciation. One should look for stocks with a sound trading volume which makes it easier to buy or sell the stock. A stock with growing potential and reducing costs will have expanding margins to yield better bottom line levels. For stocks that are linked to good growth projections, return on investment can continue over years; however, investing in an early-stage startup which is yet to emerge as a good growth stock, returns may come gradually. But one may not be able to maintain a balance and vouch for growth stocks to buy merely based on the current trading scenario.
With this view, let us look at the supply chain logistics player, Brambles Limited (ASX: BXB), which is currently trading at a market price of $9.205, as at July 09, 2018, and has seen a price change of 0.991% or $0.090 as at July 06, 2018. The market capitalization of the stock as of date is $14.45 billion and the current dividend yield stands at 3.16% which is franked at 30%. Coming to the valuation multiples the stock has a P/E of 23.950 and EPS of 0.383 AUD and the price to earnings seems to be in a mixed state given the peers.
Brambles (ASX: BXB) reported sales revenue of US$4,159.1 million from continuing operations for the first nine months of the financial year ending June 30, 2018 (FY 18), which represented an increase on the prior corresponding period of 5% at constant currency and 10% at actual FX rates. CHEP Americas with new and existing customers in the USA and Latin America pallets businesses delivered constant currency growth of 5% reflecting the ongoing expansion. In IFCO, the constant-currency growth of 8% includes the benefit of increased pricing in IFCO North America which was driven by expansion with new and existing retailer partners.
CEO Graham ChipChase of Bramble has been positive on the group as the sales revenue has been as per the expectation of mid-single digit revenue growth. In both developing and developed markets, volume expansion continues to be the main driver of the revenue growth. The company expects the benefits to start flowing in the fourth quarter and into FY19.
Looking at Bramble’s fundamentals some investors are speculating if the stock is worth punting based on any growth potential. There are good prospects for Brambles over the next few years while the P/E lies below the industry average. Even Graham ChipChase has acquired few shares on market. However, the improvement in its book value is not much and the price does not look to be very reasonable at this time while the group is yet to strategize on technology oriented service offerings. It might be better to wait and look for positives from the group.