There are some ASX shares that have very good growth credentials in my opinion. I certainly would like them in my portfolio for the long term.
Growth businesses have the potential to deliver better results over the time thanks to the power of compounding. I don’t mind a ‘growth’ business or a ‘dividend’ business in my portfolio. But these are ones I’ve got on my growth watchlist:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is an digital donation business that helps large and medium US churches to receive donations. In the most recent result, being the FY21 half-year report, it reported that operating revenue increased by 53% to US$85.6 million. It’s aiming for a total of US$1 billion of revenue.
Whilst the COVID-19 conditions have caused Pushpay’s growth to accelerate, I don’t think it will go backwards afterwards – there is a continuing shift towards digital payments.
Another factor to love Pushpay is that it appears to be extremely scalable. In the HY21 result, its EBITDAF margin (EBITDA explained) increased from 17% to 31%.
Redbubble Ltd (ASX: RBL)
Redbubble is an online artist marketplace business which sells lots of different things like wall art, phone cases, masks, clothes and so on.
In the first quarter of FY21 it reported that marketplace revenue soared 116% to $147.5 million. Gross profit grew even faster, rising by 149% to $64.5 million.
More shoppers staying at home has obviously helped demand for Redbubble’s revenue. But to me, I think there’s both an ongoing trend towards online shopping and Redbubble is rapidly increasing its market position and brand awareness. Its growth rate may slow in the 2021 calendar year, however with Redbubble already profitable I think it’s at a reasonable price for continuing growth.
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is an online furniture business which is demonstrating a lot of growth.
In the financial year to date (YTD) from 1 July 2020 to 19 October 2020 it saw revenue grow by 138%. The first quarter of FY21 saw the company generate $8.6 million of EBITDA which was more than the whole of FY20.
The reopening of stores nationwide may have a slowing effect on the company’s growth, but it was doing well before COVID-19 came along. Its future growth is valued quite highly, but I think continuing product expansion will help it continue to grow its market share.
Summary thoughts
Each of these ASX growth shares has been falling since the news of the COVID-19 vaccines’ effectiveness was announced. I think all three still have compelling growth prospects, but Pushpay would be my favourite of the three.
