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HUB shares: your next growth investment?

The Hub24 Ltd (ASX:HUB) share price is up 108.4% since the start of 2024. It's probably worth asking, 'is the HUB share price undervalued?'

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The Hub24 Ltd (ASX:HUB) share price is up 108.4% since the start of 2024. At the same time, the CSL Ltd (ASX:CSL) share price is 11.8% away from its 52-week high. This brief article explains why it could be worth adding HUB and CSL shares to your ASX investing stock watchlist.

HUB share price in focus

Founded in 2007, HUB24 has quickly become a prominent player in the wealth management sector, offering software and platform solutions for financial advice, superannuation, and investment management.

HUB24’s core products include the HUB24 platform, Class, and myprosperity. The HUB24 platform serves financial advisers and their clients, providing access to a wide range of managed funds and investment products. Class is a leading software solution for self-managed super funds (SMSFs), helping manage portfolios, legal documentation, and compliance. Myprosperity offers client portals for accountants and advisers, enhancing service and customer experience.

HUB24’s competitive edge lies in its high-quality service. In 2024, it was recognized as the Overall Best Platform in the Adviser Ratings Financial Advice Landscape Report and ranked first for Overall Satisfaction and Brand Image and Reputation in the 2024 Wealth Insights Platform Service Level Report.

CSL shares

Previously a government body, CSL is today a publicly-listed global biotechnology company that develops and delivers innovative medicines that save lives, protect public health, and help people with life-threatening medical conditions live full lives.

The company is divided into three core business units: CSL Behring, CSL Seqirus and CSL Vifor. Behring, acquired in 2004, manufactures and distributes blood plasma products. Seqirus is responsible for making flu-related products and performs pandemic-related services for governments. Finally, Vifor makes products for iron deficiency and nephrology (renal/kidney care).

CSL has developed a strong reputation with Australian investors over many decades as being a reliable company and a consistent dividend payer. With the continual rise in healthcare costs and the consistent historical performance, interest in CSL shares remains high today.

HUB share price valuation

As a growth company, some of the trends we might investigate from HUB include revenue growth, profit growth, and return on equity (ROE). These measures can indicate the growth rates and prospects of the company, as well as their ability to generate returns from their assets.

Since 2021, HUB has grown revenue at a rate of 44.4% per year to reach $328m in FY24. Over the same stretch of time, net profit has increased from $10m to $47m. HUB last reported a ROE of 9.2%.

Since CSL is more of a ‘mature’ or ‘blue-chip’ business, some of the metrics that could be considered important include the debt/equity ratio, average yield, and return on equity, or ROE. These are useful as they give us an idea of debt levels and the company’s ability to generate a return on assets and pay out profits (which is what we want from a blue chip). In FY24, CSL Ltd reported a debt/equity ratio of 62.8%, meaning the company has more equity than debt.

As for dividends, since 2019 CSL has achieved an average dividend yield of 1.5% per year.

Finally, in FY24, CSL reported an ROE of 14.6%. For a mature business you’re generally looking for an ROE of more than 10%, so CSL clears this hurdle.

It’s important to keep in mind that these are only a small selection of metrics and don’t give us enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.

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Owen Rask’s investing report available

With bond ETFs like ASX:IAF and the S&P 500 riding high, now could be one of the best times to start earning passive income from a portfolio of shares and ETFs.

In this free analyst report, our Chief Investment Officer, Owen Rask, names 10 ASX stocks and ETFs to watch.

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