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Date : 30/07/2021

Top 2 Growth Stocks Of The Week

Top 2 Growth Stocks To Consider

The ASX 200 finished the week in the red. Today, the index declined 0.33% lower at 7392.6 points – taking the weekly decline to 0.4%. The tech sector was the performing of the lot with the bnpl players such as Afterpay, Zip, Sezzle, Splitit, all succumbing to sell-offs. The miners were one of the top performers as the likes of FMG and RIO announced their quarterly profits – reporting record numbers once again and a huge boost to dividends as we approach FY21 full year earnings season.

Today, Janus Henderson was the top performer, with JHG shares surging over 7%. JHG has been one of the top performing growth stocks for some time now! Origin Energy was hit the hardest in trading today, as the stock price declined over 9%. With earnings season around the corner, expectations are sky-high, especially for some of the top growth stocks on the ASX.

Our List of Growth Stocks Of The Week

Temple & Webster (ASX: TPW)

TPW is Australia’s largest pure play online retailer in the furniture and homewares market. Temple & Webster Group operates as an online retailer of furniture and homewares. It provides furniture, homewares, home décor, arts, gifts, and lifestyle products from Australian and international designers. The firm operates through two brands: Temple & Webster, and Milan Direct.

Earlier this week, TPG shares were trading over $12 a share, however, as the firm reported its full year earnings, TPW shares declined despite the firm posting record numbers. Revenue grew 85% across the year driven by strong growth in new and repeat customers and average order values. While lockdowns during FY20 and FY21 have accelerated the underlying shift from offline to online. Among the highlights were:

  • Record year for revenue, profit and customers
  • Full year revenue up 85% YoY to $326.3m
  • EBITDA up 141% YoY to $20.5m
  • Cash flow positive year with ending cash balance of $97.5m
  • Active customers up 62% YoY to 778k
  • Trade and Commercial division up 110% YoY
  • Q4 maintained strong sales growth YoY at 26% (which is compared against Q4 FY20 which in turn grew 130% YoY.

As we can see, TPW delivered a strong result. However, it looks like TPW shares were caught in the middle of fragile market sentiment during the week. With Sydney’s lockdowns now likely to persist, TPW has the potential to emerge victorious just as it did last time strict lockdowns were in place in Australia. Today, TPW shares dipped by 3.63% – opening up an opportunity for investors to consider one of the top growth stocks!

Pointsbet Holdings (ASX: PBH)

For those of you who are unfamiliar, PointsBet Holdings is a corporate bookmaker, offering racing and sports betting products and services direct to clients via its scalable cloud based technology platform. The firm operates through the following segments: Australia Trading, Technology and United States. The company was founded by Sam Swanell, Nick Fahey, and Andrew Fahey in March 2015 and is headquartered in Cremorne, Australia.

PBH shares were one of the top winners during 2020, however, the same momentum has not really translated during 2021. On a 1-year basis though, PBH shares have returned over 93%. PHB also had an eventful week as the company announced their Q4 trading results and also announced and completed a capital raising.

For the 12 months to 30 June 2021, the Australian business had 196,585 Cash Active Clients, a 117% increase compared to Cash Active Clients for the 12 months to 30 June 2020. The US business had 159,321 Cash Active Clients, a 661% increase compared to Cash Active Clients for the 12 months to 30 June 2020. The Australian Trading business continued its strong performance, ending the quarter with Turnover of $494.8 million, up 63% compared to PCP and Net Win of $43.1 million, up 33% from the PCP. Gross Win Margin and Net Win Margin were an impressive 13.4% and 8.7% respectively continuing the trend of strong quarterly margins. It was particularly pleasing that Net Win grew by 33% compared to the PCP, given the Q4 FY20 industry results were significantly boosted due to COVID.

With regards to the capital raising, PBH completed the placement offer raising A$215.1 million at A$10.00 per Share. It was strongly supported by Australian and international existing and new institutional shareholders. The Placement price represents an 8.1% discount to the theoretical ex-entitlement price of A$10.88 and an 11.4% discount,

based on the closing price of Shares on the ASX on Wednesday, 28 July 2021 of A$11.29. Proceeds of the fully underwritten Placement, together with the previously announced entitlement offer will total approximately A$400 million – giving the company a significant amount of funds to further boost their growth strategy. Therefore, PBH shares are definitely worth considering for investors looking for the top growth stocks the ASX has to offer. PBH share price ended at $11.29 a share – a 4.48% dip today, as the share price is expected to move closer to the capital raising price.

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Top 5 ASX Stocks
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