ASX growth shares could be a wonderful opportunity to deliver strong returns because of much they could grow.
These two ASX growth share ideas now look undervalued after a significant decline and are still growing strongly.
Xero Ltd (ASX: XRO)
Xero is a cloud accounting and business administration software leader.
It has a significant presence in a number of countries including Australia, New Zealand and the UK. It is winning significant subscriber numbers in those markets and it also has increased prices multiple times in recent years, leading to significant organic revenue growth.
It also has a presence in countries like the US, Canada, Singapore, South Africa and plenty more.
In the year to 31 March 2026, its number of subscribers grew 11% to 4.9 million and operating revenue grew 31% to $2.75 million.
While net profit declined in FY26, I think the company’s future looks very promising because of its operating leverage. In the coming years, I’m expecting its profit margins to improve and this should help the company’s net profit in the coming years.
The ASX growth share is significantly get involved in AI, which will certainly change how the company operates (and customers interact with it), but it could also help its margins.
The Xero share price has dropped by around 60% in the past year – it looks much better value.
REA Group Ltd (ASX: REA)
REA Group is a business that owns a number of property-related businesses including realestate.com.au, realcommercial.com.au, flatmates.com.au, property.com.au, Mortgage Choice, PropTrack, Campaign Agent and more.
The business is very interlinked with the Australian property market, which is a good thing when the market is going up and perhaps negative when the property market is down.
The REA Group share price is down around 40% in the past year – it’s a lot cheaper now. Both Australian tax changes and RBA rate rises are major headwinds, so it’s understandable why the business has lost some investor confidence.
But, the ASX growth share still has an excellent market share, with significantly more visitors than its nearest competitor, good margins and so on.
Australia’s population and cities continue growing, giving the business pleasing long-term earnings tailwinds.
Based on the estimate on Commsec, the company is projected to generate $5.04 of earnings per share (EPS). That means it’s priced at under 30x FY26’s projected profit.
