Top 2 ASX Growth Stocks To Buy in 2021
A dramatic, broad-based sell-off swamped the ASX on Thursday. Meanwhile, NSW unveiled its road map out of lockdown. This provided the market with a glimpse of how the country will re-emerge from its fight against the delta variant. COVID-19 remains the main catalyst. The ASX 200 sunk by 1.9%, losing 142.5 points, to $7,369.5.
We have seen losses posted by all three major benchmarks on Wall Street as well. Consequently, the ASX followed the same path, tumbling immediately in the opening of minutes of trade. All the sectors across the board declined. Technology stocks led the way, falling 3.2%.
In our view, the recent pullback can be an occasion to load on a few interesting stocks. Hence, for us, it is a serious cooling-off day after a pretty much hot year. Although, we are not surprised about this correction given the current macro environment. Obviously, there are a few things that move the market now. Thus, the big narrative is the softer growth outlook and a slower-than-expected global economic expansion. Explore our expert insights on top 2 ASX growth stocks.
Our List of Growth Stocks of The Week
Clearly, it has been a brutal day for the ASX 200 Index. The benchmark index has just closed the day on Thursday, down a sizeable 1.9% at 7,369.5 points. However, if you are a long-term investor, this should be a good time to look for some additions to your portfolio. Here are two interesting stocks you may consider:
IDP Education Ltd. (ASX: IEL)
IDP is the world leader in overseas study consulting services. The company has offices in 32 countries around the world. This language testing and student placement firm has been recently tipped as hot stock to buy by a few analysts. While we acknowledge that the immediate term is quite volatile due to the pandemic. In the long run, we see in IDP considerable growth potential. Hence, we forecast a substantial three-year CAGR above 65% for its EPS. Indeed, this is in anticipation of a rebound after a tumultuous FY21. Thus, the year was completely impacted by COVID-19, whereas half of FY20 was unaffected by COVID-19. IDP Education’s FY21 net profit was down 42% to $39.5 million.
In contrast with FY21, the long-term growth opportunity for IEL is compelling. Indeed, the company is reinvesting in digital capability. Consequently, that will increase IDP’s competitive advantage and strengthen its relationship with tertiary education institution clients.
We estimate IEL to have less than 5% market share of the Canada and UK markets. Therefore, there is a significant opportunity to gain share in a highly fragmented and under-penetrated market.
Kogan Ltd. (ASX: KGN)
Another ASX share that could be a top buy and hold investment is in the e-commerce Kogan. KGN is one more stock that should be taken as a long-term play. While KGN has just completed a mediocre 12 months in FY21 along with a soft start of FY22, we remain positive in the long-term outlook. The reason for that is KGN’s sizeable customer base and strong market position. In addition, Kogan is benefiting from the ongoing shift to online shopping. As a result, this leaves the company well-placed for growth over the next decade.
What happened during FY21? Well, variable demand and excessive inventory have caused big impacts on Kogan. FY21 gross profit went up 61% to $203.7 million. On the other hand, net profit fell 86.8% because of one-off inventory, logistics and Mighty Ape acquisition costs. However, the business is starting to see a return of growth again.
In FY22, Kogan expects to deliver strong growth with its exclusive brands. Furthermore, KGN will focus on the enhancement and development of its marketplace. And finally, we should see the benefits from the full integration of the Mighty Ape business to materialise in earnings growth onward 2HFY22.