Amid a changing economic climate, Australian investors might turn their attention to local ASX growth stocks, especially with expectations of the Reserve Bank of Australia (RBA) reducing interest rates starting June. Economic experts forecast three rate cuts in 2024, potentially lowering the cash rate to 3.6 percent by the end of the year.
Here are three promising ASX growth stocks to keep an eye on in 2024.
TechnologyOne (ASX: TNE)
TechnologyOne Ltd, a leading player in cloud-based technology, AI, and machine learning equipment, is attracting attention for its growth potential. Analysts point out that the company presents value, trading at a lower earnings multiple compared to its SaaS peers when factoring in growth potential. The firm’s robust market position, focus on defensive end markets, and mission-critical systems are seen as drivers for a higher valuation.
In the second week of January, TNE shares saw a significant increase, climbing 4.08% to $15.30. The company’s market capitalisation stands at $4.99 billion.
Analysts remain optimistic about TechnologyOne’s future, particularly valuing its enterprise resource planning (ERP) software. The company’s established markets and expansion potential in the United Kingdom are key considerations. Moreover, its progress towards the FY 2026 annual recurring revenue (ARR) target reinforces this positive perspective.
Cochlear Limited (ASX: COH)
Cochlear, a prominent manufacturer of implantable devices for severe hearing loss, offers the Nucleus cochlear implant, Hybrid electro-acoustic implant, and Baha bone conduction implant. Recognised for their cutting-edge technology and market leadership, Cochlear’s products are well-positioned for sustained growth.
The company, with a market capitalisation of $19.71 billion, is set to benefit as ageing populations increasingly experience hearing issues. Reporting a 10% increase in underlying profit in the latest full-year results, Cochlear’s hearing implants division saw a $305 million rise in underlying net profit in FY23, forecasting a growth of ASX COH shares 16% to 23% in FY24.
Airtasker, facing a challenging economic climate, has maintained a strong position in the competitive online marketplace, rivalling platforms like Freelancer and Upwork. With its shares at $0.21, the company capitalises on a vast $600 billion market across Australia, the US, and the UK. The past year’s 40% revenue increase to $44.2 million is a testament to its robust market demand and effective business strategies, propelling it towards positive cash flow in the current financial year. The company’s healthy market capitalisation of $93 million, combined with being debt-free and holding AU$17 million in cash as of June 2023, showcases its financial stability and growth potential.
Airtasker’s financial prudence is further highlighted by a 22% reduction in cash burn, bringing it down to AU$14 million and extending its cash runway to around 14 months. Analyst forecasts suggest the company will reach cash flow breakeven well within this period, ensuring long-term sustainability.
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