I’ve always got my eye out looking for quality ASX growth shares that may be opportunities.
Businesses that are growing profit quickly can generate some good results over the long-term, particularly if the market is underestimating the potential.
I’ve got my eyes on these two:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a leading digital payments that specialises in donations.
Currently, its main customer base is large churches in the US. But it’s looking to diversify earnings by expanding into smaller churches and Catholic churches.
The company recently reported its FY22 half-year result. But the market didn’t seem to like it. The Pushpay share price is down 22% over the last week.
There were a couple of things that weren’t quite as good as they could have been. For example, total processing volume grew by 9% – slower than recent reports.
However, there were some positives as well from the ASX growth share in my opinion. The business continues to see rising margins, which is going to be an important factor for profit growth for the coming years ahead. Pushpay’s gross profit margin increased by one percentage point to 69% and the underlying EBITDAFI margin (EBITDA explained) increased by another percentage point to 32%.
Net profit after tax grew by 43% to US$19.1 million. That is an attractive increase, in my opinion.
As long as the margins keep heading up, processing volume keeps rising and the customer count grows then Pushpay can be a really good long-term contender.
It also reported continued growth of operating cashflow, up 14% to US$30.8 million.
Redbubble Ltd (ASX: RBL)
Redbubble is another digital business that has experienced a significant amount of growth over the last couple of years.
It sells a growing variety of products with cool designs on them that were designed by artists.
The Redbubble share price has dropped 7% over the last month. I think this presents a good opportunity to buy a business which is seeing a good amount of underlying growth. Excluding mask sales, Redbubble expects FY22 marketplace revenue to be slightly above FY21 underlying marketplace revenue.
Management believe that it is operating in sector with an addressable market of more than US$300 billion within its current addressable product categories. The ASX growth share is aiming for US$1.25 billion marketplace revenue as it invests heavily for growth.
Redbubble thinks that it has a number of favourable tailwinds including the structural shifts to e-commerce expected to endure and the increasing consumer demand for unique and meaningful products.
It continues to win new customers and achieve growing sales from returning customers.
Redbubble believes it can increase its competitive position by driving top line growth through customer acquisition and loyalty. Scaling the network improves the customer experience as well as unit economics of profitability.
