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Date : 06/10/2021

Top 2 ASX Stocks Considered As Good Investment

2 Best ASX Growth Stocks Considered As Good Investment

Today, the ASX 200 traded higher gaining 13.10 points or 0.18% to 7,261.50. This was fuelled by market participants which tracked a rebound in the U.S. market. The energy companies were buoyed as oil prices extended 7-year highs. Explore our list of ASX Stocks for your next investment.

Our List of ASX Growth Stocks To Grow Your Investment Portfolio

As the market continues to remain under selling pressure, we think that it might be the right time to add to your portfolio these two growth stocks in anticipation of an imminent rebound of the broad market.

Kogan Ltd (ASX: KGN)

One of the ASX shares that could be a top buy and hold investment of the moment is the e-commerce, Kogan. 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.

Today, Kogan closed the day at $9.32 per share, at a level of significant support. Hence, that could be the right time to get involved in this long-term investment while KGN is still cheap.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is quite a unique business. The company primarily sells donor and church management systems to the global faith sector. The firm derives revenue from subscription fees and processing fees for donations processed through its giving platform. PPH operates mainly in the US, and its core customers are large Evangelical and nondenominational churches.

FY21 was an important year for the company, particularly in the COVID-19 environment. After integrating the Pushpay and Church Community Builder solutions together, PPH won new customers. Furthermore, the firm capitalised on cross-selling opportunities within its customer base and had achieved operational efficiencies across its combined business.

Whilst Pushpay grew operating revenue increased by 40% to US$179.1 million, margin improvements also helped propel profit higher too. The gross profit margin improved from 65% to 68% in FY21.

We could expect significant operating leverage to accrue as operating revenue continues to increase, while expense growth remains low. This was mainly the result of Pushpay’s scalable processes in its software.

All of the above supported the company’s net profit to rise by 95% to US$31.2 million. In addition, operating cash flow went also up by 145% to US$57.6 million during the period.

Pushpay is focused on growing and diversifying where it generates its profit. The company is now looking at geographic diversification. Although PPH has announced the acquisition of Resi Media and wants to expand in the Catholic sector.

As of today, PPH shares are traded at $1.7 apiece, slightly down by 4.2% year-to-date. However, the short-term weakness in Pushpay’s share prices might be a chance given its valuation at 34 times FY22’s estimated earnings.

 

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