I reckon that the ASX growth shares I’m going to write about in this article have a good chance of performing well in 2021.
2020 has been a crazy year for many reasons, with COVID-19 and the associated impacts being an obvious one. Some businesses could grow strongly in 2021 and may be worth a spot on your watchlist:
Bingo Industries Ltd (ASX: BIN)
Bingo is one of the largest waste management businesses in Australia. It operates residential and commercial waste services, recycling and bin manufacturing.
The company generated growth during FY20, despite all of the difficulties with that COVID-19 brought. Underlying net revenue rose by 21%, underlying EBITDA (EBITDA explained) grew by 41% to $152.1 million and underlying operating free cash flow grew by 37.4%. There was also a 440 basis point (4.4%) increase of the underlying EBITDA margin to 31.3%.
Bingo said was seeing solid momentum to the end of October, despite COVID-19 impacts in Victoria. A modest uptick in prices has occurred since September 2020.
The ASX growth share said it’s expecting weaker construction activity in residential and non-residential construction, however I think activity could grow as the months go on, particularly if the current property boom continues.
Bingo itself said that FY22 and beyond has the potential to offer significant upside with regulatory and market tailwinds, with growing addressable market sizes and the ability to better utilise its network capacity. Management think there’s a clear pathway to EBITDA in excess of $250 million from the existing asset base. It could grow further with more facilities, better technology and by entering Queensland.
Magellan Financial Group Ltd (ASX: MFG)
Magellan is a funds management business with Hamish Douglass being one of the key people in charge as the chief investment officer and chairman of the business.
The company has steadily grown its funds under management (FUM) over the years, to reach $103 billion at the end of November 2020. This generates impressive management fees each year and Magellan regularly outperforms its respective benchmarks, which can lead to pleasing outperformance fees.
I think a combination of net inflows and good investment performance will help Magellan continue to grow its FUM during 2021.
I’m also particularly interested in this ASX growth share due to its investments in businesses that could generate significant capital growth over the long term. The Rask Media team covered the announcements about new investment bank Barrenjoey and the Mexican fast food choice Guzman y Gomez.
Betashares Global Quality Leaders ETF (ASX: QLTY)
Many quality global businesses have had a tough time during 2020, but I think that could reverse during 2021 as the COVID-19 vaccines are rolled out and countries (hopefully) get better at managing COVID-19 and the impacts.
In the holdings of this ETF are businesses that have a high return on equity (ROE), high profitability, low leverage and good earnings stability.
I like this ETF more than other global ones. I like that it offers more geographic diversification than iShares S&P 500 ETF (ASX: IVV) and I believe, on average, it has a stronger portfolio than what Vanguard Msci Index International Shares ETF (ASX: VGS) offers.
At 23 December 2020, its top 10 holdings were: Keyence, Accenture, Adobe, Intuit, SAP, L’Oreal, AIA, Novo Nordisk, NVIDIA and 3M. These are among the best in the world in their respective industries.
Since the ETF’s inception in November 2018, it has delivered average net returns per year of around 20%. The index it tracks has delivered an average return of 15.6% per year over the last five years.
There are also other ASX growth shares I’ve got my eyes on in 2021 including Pushpay Holdings Ltd (ASX: PPH) and Redbubble Ltd (ASX: RBL).
