One super growth share I'd sell today and one I'd buy

Asos (LSE: ASC) has held the title as one of AIM's premier growth shares for many years. And despite its problems, such as increasing competition and high valuation, the shares have defied expectations year after year.

Indeed, as the rest of the retail sector has swooned, this year shares in the company have gained 16.3% thanks to better than expected sales growth. Since the end of 2014, shares in the company have gained 150%.

However, despite the company's recent gravity-defying gains, I believe it might be time for investors to sell up and look for other bargains in the market.

Time to sell?

Asos has always been an expensive stock. Over the past five years, the shares have traded at an average P/E of 64. Today, they trade at a forward earnings multiple of 80.3, which is expensive no matter how you look at it. This valuation is a 25% premium to the five-year average. What's more, even though City analysts expect the company to chalk up earnings per share growth of 22% for the year ending 31 August, the shares trade at a PEG ratio of 3.6. A PEG ratio of less than one signals that the stock in question offers growth at a reasonable price.

A cheaper pick

Compared to Asos, FTSE 100 equipment rental company Ashtead(LSE: AHT) looks cheap. Earlier this month, the firm announced its results for the year ending 30 April, which surpassed expectations. Revenue rose by 13%, and underlying pre-tax profit jumped 23% to £793m, beating expectations. It generated £319m of free cash flow. As a result, management decided to hike the firm's full-year dividend payout by 22%.

Alongside these results, management also issued an upbeat outlook for future trading, stating that the company expects free cash flow to remain robust. Bolt-on acquisitions, as well as organic growth, will drive further revenue expansion.

Compared to Asos, Ashtead looks to be the better, more affordable growth stock to buy. City analysts are expecting the company's revenue to grow by 20% to £3.8bn for the year ending 30 April 2019 from £3.2bn as reported in the most recent fiscal year. Over the same period, earnings per share are expected to grow by nearly 30% as operational gearing improves margins. City analysts have pencilled-in 15% earnings per share growth for the fiscal year ending 30 April 2018. Based on this forecast, shares in the company are currently trading at a forward P/E of 13.5. The PEG ratio is 0.9, which signals growth at a reasonable price.

The other thing to note is that unlike Asos, Ashtead operates in a cyclical but at the same time defensive business. Even though the company's revenues move with the economic cycle, due to the hefty initial capital investment required to set up an equipment rental firm, it holds a leading position in the market. Meanwhile, Asos is facing increasing competition from the likes of Boohoo.com.

Overall, Ashtead looks to be the better pick.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended boohoo.com. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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