There are some wonderful ASX growth shares I’d want to buy in February. I’m going to tell you about two.
Businesses that provide software have an inherent advantage when it comes to growth because they offer an intangible service. With how it’s provided, it can deliver higher profit margins than businesses that deal in physical products which require manufacturing, shipping, warehouses and perhaps stores.
The growth of high-margin businesses is not usually impacted by physical limitations, such as needing an extra factory or relying on global shipping not to be affected by COVID-19 or Red Sea attacks.
Having said that, here are two I like a lot.
Xero Limited (ASX: XRO)
Xero provides (cloud) accounting software for business owners, bookkeepers, accountants, advisors and employees to use.
The Xero gross profit margin is creeping towards 90%, which means it’s making lots of usable gross profit for the business to spend on marketing, software development and hiring the best people.
Xero is looking to become more profitable, as it balances growth and being profitable today. That will hopefully mean Xero is ensuring it’s not wasting money on things that won’t make much of a longer-term difference.
The ASX growth share is still growing subscribers at a good rate. Subscription price increases are helping send the average revenue per user (ARPU) higher.
Xero has plenty of growth options to help its revenue and profit. I think it has lots more room to rise, so I’m backing it.
Betashares Global Cybersecurity ETF (ASX: HACK)
The HACK ETF is one of the best exchange-traded funds (ETF), in my opinion.
It gives exposure to an excellent sector – cybersecurity. There is sadly a growing number of cyber attacks globally. More of us are doing more tasks online, including businesses, which makes a tempting target for cybercriminals.
It’s important that organisations and households protect their information, data and log-ins. That’s where cybersecurity businesses come in.
The HACK ETF is invested in a total of 32 positions, including Broadcom, Crowdstrike, Palo Alto Networks, Infosys, Cisco Systems, Sentinelone, Juniper Networks, Okta and Fortinet.
78% of the portfolio was invested in US businesses at the end of December, with a few other countries having a presence including India, Canada, Israel and Japan.
I think cybersecurity is a growth industry, but it’s also defensive because we need to be protected, even in a downturn. That’s what makes it a great ASX growth share, in my eyes.
Since inception in August 2016, the HACK ETF has returned an average of 17.2% per year. I think it can outperform over the long-term, if these trends continue.
