ASX growth shares have fallen out of favour recently as investors continue to rotate into value sectors.
Here are three that could be worth watching closely in June.
Shares in digital payments company EML Payments Ltd (ASX: EML) are still down 36% after one of its subsidiaries was notified by the Central Bank of Ireland (CBI) about a potential breach of anti-money laundering and counter-terrorism regulations.
The subsidiary in question is Irish-based PFS Card Services (PCSIL), which represents around 27% of EML’s total revenue.
The CBI invited PCSIL to provide it with submissions regarding the concerns, which it planned to do by 27 May. However, no more information has since been provided to the ASX, so shares still seem to be in a state of limbo at the moment.
Depending on the outcome, the current EML share price could be a good opportunity. Given the uncertainty, I’ll be waiting on the sidelines for now.
Another ASX growth share that’s pulled back recently is Smartpay Holdings Ltd (ASX: SMP), a New Zealand based company that distributes EFTPOS terminals.
Smartpay just released its full-year results, which you can read about here.
One of the reasons I like Smartpay is due to some macroeconomic trends that could work to its advantage.
An example of this would be the increased use of credit and debit cards as consumers shift away from cash-based payments.
As Smartpay generates a small percentage of the transaction value processed through its terminals, this will ideally act as a nice tailwind on revenue.
The sentiment around online marketplace Redbubble Ltd (ASX: RBL) has been undeniably low recently.
Redbubble’s market valuation has tumbled close to 40% since releasing its Q3 trading update, which revealed short-term profit will be sacrificed for reinvestment to continue growing the business in future years.
Some investors have presumably panicked at the thought of Redbubble being a once-off beneficiary of COVID-19. While of course this can’t be ruled out, I think the broader growing thematic of e-commerce and print on demand could still work to its advantage, even in a post-COVID trading environment.
Customer acquisition costs (CAC) are probably my biggest concern moving forward, which have recently increased partly due to how saturated the online space is with other e-commerce platforms.