The NASDAQ 100 (NDX)
fell another 4.8% overnight. That means it’s down 11% since 2 September. I’d buy these 2 ASX shares in this volatility.
I believe it’s a good idea to snap up opportunities when the opportunity presents itself. The current volatility could present a good opportunity to buy some ASX shares. I’d buy these:
Redbubble Ltd (ASX: RBL)
Redbubble is a leading ecommerce business for artists to sell various items like wall art, apparel and, recently, masks. It operates two websites – Redbubble and TeePublic.
The business can significantly benefit from network effects. The more artists it attracts the more customers it can attract, which attracts more artists and so on. Scale is important for an ecommerce business. Incremental sales add more and more to the bottom line, making it more profitable and a stronger business for shareholders.
FY20 was a strong year for the company with marketplace revenue growth of 36%, gross profit growth of 42% and operating EBITDA growth of 141% (click here to learn what EBITDA means).
What excites about Redbubble is the accelerating growth and the current valuation.
In the fourth quarter of FY20 it saw marketplace revenue growth of 73%, gross profit growth of 88% and it saw operating EBITDA of $8.4 million, which compares to $15.3 million of operating EBITDA for the whole year.
Redbubble generated $38 million of free cashflow in FY20. That means at the pre-open share price, Redbubble is valued at 30x trailing free cashflow with strong growth potential.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is another tech business that’s growing very strongly. In FY21 the tech donation business is expecting large growth driven by the US faith sector. It’s aiming to grow its EBITDAF by more than 100% to US$50 million to US$54 million.
The business offers its US church clients a livestreaming option to broadcast to its congregation who can’t be there. It’s very useful in these COVID-19 times.
Pushpay’s profit margins are rising fast and its recent acquisition of Church Community Builder should mean its offering to clients is even more attractive. It could organically increase its revenue if it can sell both sets of services to its existing clients.
It’s a very exciting ASX technology share that could expand to other countries or grow in other religions or donation sectors. There is a lot of optionality with Pushpay. It’s wanting to reach US$1 billion of revenue, but it can deliver good shareholder returns long before it reaches that target.
Looking at CommSec’s estimates, Pushpay shares are valued at 33 times the forecast earnings for the 2021 financial year.
Summary
Pushpay and Redbubble are both great ASX growth shares in my opinion. I think volatility like this presents a good opportunity to buy businesses at better prices. I’d also think about other tech ideas like these seven outlined by Owen Raszkiewicz, Rask Media’s lead analyst.
