If you’re looking for ASX growth shares you’ve come to the right place. Here’s why I think it’s worth looking at shares of Bapcor Ltd (ASX: BAP), Webjet Limited (ASX: WEB) and Nearmap Ltd (ASX: NEA).
Why Buy ASX Growth Shares?
The Australian stock exchange (ASX) has shares for thousands of companies. The best kind of shares to buy are those that can pay some income back to their shareholders (known as dividends) and keep enough cash in the bank to fuel long-term growth. In accounting, we call the money left inside a business to fund growth the ‘retained earnings’.
When it comes to growth shares I think investors must be prepared to encounter periods when things seem highly uncertain or scary. For example, it wouldn’t be surprising to witness shares of a proper growth company rise or fall by 10% in a single day because of just one piece of news.
Having said that, growth shares can be extremely rewarding for investors willing to take the extra risk required to own these shares for the long run (5+ years).
Without further ado, here are three ASX growth shares on my watchlist today.
1. Bapcor Ltd
Originally called Burson Group, Bapcor is a specialist auto parts business. What most consumers don’t know is that it’s more than a retailer of spare parts. Its bread and butter is trade services. For example, when you get your car serviced by a mechanic, the mechanic doesn’t store all of the parts for the make and model of your car in their shop. Instead, they rely on a nearby distributor like Burson’s who can deliver the exact parts within a matter of hours.
Bapcor shares have rebounded strongly in recent months following a sell-off earlier in the year. Fortunately, even at these prices, the shares trade with a historical/trailing dividend yield equivalent to 2.3%.
2. Webjet Limited
Webjet is a digital travel business spanning both global consumer markets (‘B2C’) and wholesale markets (‘B2B’). It was established in 1998 and now claims to be the leading online travel agency (OTA) in Australia and New Zealand. Webjet says it was the world’s first to use ‘Travel Services Aggregator’ technology and is now leading the industry in blockchain innovation.
With overseas growth ambitions and further expansion into the lucrative corporate travel sector, plus good management and scalability, there’s plenty like about Webjet. Further, with a handy dividend yield of 2% and a reasonable valuation, growth investors should be watching Webjet shares closely as we head into 2020 just in case we see any more setbacks.
3. Nearmap Ltd
Nearmap is a leader of aerial imagery technology and location data, providing frequently-updated, high-resolution aerial imagery. It currently operates in Australia, New Zealand and the United States. It’s one of the ten largest aerial survey companies in the world by annual data collection volume.
Nearmap’s foray into the US market and abroad have been catching on, and the company now generates 31% of revenue outside Australia and New Zealand. With an impressive market-leading product that attracts recurring revenue to the tune of 94%, Nearmap is getting far more valuable with every new customer it signs. Keep a watch on this one — pun intended!
Buy, Hold Or Sell?
All three of these businesses are impressive mid-cap ASX shares worth considering as part of a long-term, diversified portfolio. I’ve been watching all three for years and, regrettably, have yet to pull the trigger since I sold my Nearmap shares for somewhere between 50 and 60 cents — they’re now priced around 5x that amount! At the right price I’d buy each of them but right now, my choice of the three would be Nearmap.
For more exciting growth share ideas, grab a free copy of my investing report below.
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Disclosure: At the time of publishing, Owen does not have a financial interest in any of the companies mentioned.
