ASX growth shares can make really big returns if things go well. Companies that are growing revenue and seeing rising margins can accelerate returns for investors.
I’d prefer to invest in companies that seem to have many years of growth potential, because that means they can be compounding machines for years to come. Here’s why I like these two ASX growth shares.
Betashares Global Cybersecurity ETF (ASX: HACK)
This exchange-traded fund (ETF) gives Aussie exposure to the global cybersecurity sector. As we’ve seen in Australia over the last year or so, there has been a growing number of high-profile cyber attacks, with victims such as Optus, Medbank Private Ltd (ASX: MPL), IPH Ltd (ASX: IPH) and Latitude Group Holdings Ltd (ASX: LFS).
Governments, businesses, other organisations and individuals need to ensure that their information, intellectual property, internet connection and so on are fully protected against cybercriminals. I believe there’s going to be an increasing need for cybersecurity services over the long-term as more and more things go digital.
I don’t think businesses and governments would not pay for cybersecurity services, even in a recession, so this ETF could have a growing and defensive profile.
The ETF has delivered good returns over the long-term, with net returns of an average of 14% per year over the last five years, and I’m saying the next five years could also be good.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is a leading ASX healthcare share. More than a third of US women that have a breast screening have at least one Volpara software module used on their data and images.
The ASX growth share has already shown it can grow its market share in a market where it operates. I now believe the company can grow its market share impressively in other countries in Europe, as well as Australia. If it can successfully get more healthcare professionals to focus on analysing risk to advise the patient, then this could mean more revenue per user, and could boost profit margins because it’s just extra revenue from the same clients.
With a gross profit margin of over 90%, each year of revenue growth is very valuable for the company’s improving financial profile. It’s doing well at limiting expense growth, despite all the inflation.
With a subscription revenue base, there’s good visibility on its future revenue.
