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2 ASX growth shares I’d buy in January 2022

January 2022 could be a great month to hunt for great ASX growth shares. I’ve got my eyes on some ideas.

Businesses that are rapidly growing have the potential to produce solid shareholder returns over time.

I think that the following two ASX growth shares can produce really good results over time:

City Chic Collective Ltd (ASX: CCX)

City Chic is a leading retailer of clothes, shoes and accessories for plus-size women. City Chic is a global business. It has bought a number of businesses in different markets. City Chic acquired online-only retailer Avenue in the US, Evans in the UK and Navabi in Europe.

Growth of the overall business is helping achieve scale benefits and rising margins. It’s pursuing very compelling cross-selling opportunities between the different businesses and markets. For example, it’s bringing Avenue to the Australian market.

FY21 sales grew 32.9% to $258.5 million and underlying net profit increased 80.6% to $24.9 million.

It’s working on growing its market share in the US, as well as Australia and New Zealand. It’s also introducing the full assortment of products to the Evans customer base. It is also expanding its marketplace partnerships in all regions.

The ASX growth share is looking to continue to improve its ANZ store network as well as looking for more acquisition opportunities.

According to CommSec, the City Chic share price is valued at 27 times the 2023 financial year projected earnings after a 9% decline of the share price since the end of November 2021.

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty is a leading online retailer of beauty and personal care products.

The company is operating in a multi-billion industry where it is the leader and it’s rapidly increasing in size.

FY21 was a very successful period for the business as sales soared 48% to $179.3 million and the gross profit margin increased by another 1.2 percentage points to 33.1%.

The net profit line of the business isn’t growing much yet because it’s investing so much for growth. But if it can rapidly capture an impressive market share then its margins can quickly rise and it can ease up on things like marketing and growth spending relative to its size.

Despite the huge year of growth in FY21, growth continues quickly in FY22. The first three months of this financial year showed a rise of revenue of 25%.

With the Adore Beauty share price down 9% since the end November 2021, the ASX growth share looks like an even more attractive idea to me for the long-term.

If you’re looking to learn how to do your own ASX company valuations, take our free share valuation course, which takes you through 6 common share valuation techniques, step by step.
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