ASX shares with a lot of growth potential could be worth looking at as share prices slip on inflation worries.
I’m not sure whether the inflation scare story is going to continue, which could send share prices down even lower, but at least growth shares are growing fast, which means that they’ll be able to hopefully grow over the long term after this period of volatility.
Considering how quickly the below businesses are growing revenue, profit and customer numbers, I think they’re worth considering for the long term:
Kogan.com Ltd (ASX: KGN)
Kogan.com is one of the leading e-commerce businesses in Australia. It sells most things you could want to buy online like TVs, laptops, appliances, phones and so on. You can also buy other services that are low-cost, such as phone plans, health insurance and credit cards.
One of the main benefits of the Kogan.com model is that it can sell more and more of a consumer’s potential expenditure. Kogan.com also has a loyalty program, which customers pay to unlock free shipping, member-only deals and so on.
Kogan.com is seeing strong growth across the business. In HY21, Kogan.com saw 97.4% growth of gross sales, 126.2% growth of gross profit, 184.4% growth of adjusted EBITDA (EBITDA explained) and 211.7% growth of adjusted profit / earnings per share (EPS). Reported net profit went up 164.2% to $23.6 million.
The ASX share continues to invest heavily in its capabilities, marketing and acquisitions which will help the business growth further.
In January, adjusted EBITDA went up more than 90%, showing that the rest of the year could show good growth too.
Looking at the earnings estimates on CommSec, Kogan.com shares are valued at 20x FY23’s estimated earnings.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a digital donation business. Its main client base is large and medium US churches.
There has been an ongoing shift to digital payments, and Pushpay is one of the ASX shares that is benefiting from that. The adoption of digital donation has accelerated due to COVID-19.
It’s really useful that Pushpay offers various tools that are helpful during a pandemic, such as digital church management tools as well as livestreaming.
Pushpay is very scalable – in the FY21 half-year result its EBITDAF margin (EBITDA explained – the F stands for foreign currency) saw a 14 percentage point increase to 31%.
The ASX share is looking to expand in multiple avenues – different countries, smaller churches and more services for clients.
It’s aiming for US$1 billion of revenue over the long term, so I think there’s a lot more growth that can come. I think profit can grow faster than revenue due to its operating leverage.
Using profit projections on CommSec, the Pushpay share price is valued at 22x FY23’s estimated earnings.
