There are some really great ASX shares that investors can pick from. They could be candidates for a growth watchlist.
However, I’m not jumping on them instantly today because they’re not exactly cheap right now.
Even so, they are great businesses that are worth watching:
Xero Limited (ASX: XRO)
Xero is one of the world’s leading cloud accounting businesses. The company has a long-term vision and is really focused on achieving that. It’s the growth approach it takes with clients. Those goals reflect the investment approach into Xero’s tools and software. That long-term vision also gives the business the flexibility to make bolt-on acquisitions that improve the overall offering.
The ASX share has one of the most impressive gross profit margins around, at 86% in FY21.
If it keep adding subscribers it can generate impressive levels of cashflow and profit in the future.
Pro Medicus Ltd (ASX: PME)
Pro Medicus is becoming a world leader when it comes to health imaging. It’s winning all of the major contracts that have come up in recent months. Its latest win was a 8-year, $14 million contract with The University of Vermont Health Network to replace multiple legacy systems, further extending its academic institution footprint.
The ASX share is growing profit and dividend at a solid double digit rate. What is particularly impressive to me is the EBIT margin (EBIT explained), which was 59% in the HY21 result. That means a lot of new revenue can fall straight to the profit line for shareholders.
REA Group Limited (ASX: REA)
REA Group has a very strong market position when it comes to advertising real estate in Australia. It’s a very strong position where it has the most listings, so potential property buyers go there first. With the most potential property buyers, property sellers make sure they’re listed on there first. It’s a great loop.
The platform has already been created, so new listings are predominately just extra profit and cashflow for the ASX share.
I also really like the international property site stakes that it has (in Asia and the US), which gives long-term profit growth as those countries go more digital over time.
Summary thoughts
All of these ASX shares look like really good companies. But their share prices have been riding high – the market recognises how good they are. The Xero share price dips in March and May were good opportunities. So I’d keep a lookout for other declines.