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Date : 09/11/2021

Why Investors Are Considering These ASX Growth Stocks?

2 Best ASX Growth Stocks Considered As Good Investment

The ASX 200 closed lower on Tuesday, dropping 18 points or 0.24% to $7,434.20, as financials dipped, whilst gold miners lifted as the precious metal held steady at 2-month highs.

Our List of ASX Growth Stocks To Grow Your Investment Portfolio

As the market is consolidating, these might be some of the really great ASX shares to consider for their growth potential over the long term:

Airtasker Limited (ASX: ART)

One of the great stocks of the moment is Airtasker. Airtasker is a community platform that connects people who need to outsource tasks and find local services, with people who are looking to earn money and ready to work. It helps to complete home cleaning, handyman jobs, admin work, photography, graphic design or even build a website. The company generates revenue from service fees and stored value brokerage.

The ART shares are setting the scene for growth in the UK and US. It’s already growing rapidly in the UK. In the first quarter of FY22, it saw UK gross marketplace volume increase by more than 100%, though this was from a low number. While in the US, expansion and the Zaarly integration is progressing well, with city-level markets launching in Dallas, Kanas City and Miami.

Despite the lockdowns, Airtasker was able to grow its overall marketplace by 6.2% year on year to $35 million. Since the easing of restrictions in Sydney and Melbourne, the company experienced a sharp bounce back with the latest weekly growth marketplace volume of $3.6 million, which was $185 million on an annualised run-rate basis. The business noted its heading into its strongest southern hemisphere seasonal growth period.

Airtasker has one of the highest gross profit margins on the ASX, with a margin of 93%. This could be very helpful for future profit growth.

By the end of FY22, the business is targeting an annualised run rate of international growth marketplace volume to be between $8 million to $10 million. That compares to around $3 million in FY21.

We believe that Airtasker has an enormous global opportunity, with more than $600 billion of a global total addressable market for existing local service industries in Australia, the US, and the UK. Australia reportedly represents a $52 billion opportunity. At the time of writing, ART is trading at $1.08 per share.

Xero Limited (ASX: XRO)

Another hot stock to consider is Xero. Xero provides a cloud accounting solution for small businesses. The software enables SME owners to run their business efficiently on the go by uploading their banking transactions and invoices. Thus, that is a fantastic solution valued by many clients. On top of that, Xero reconciles the transactions and provides its clients with accounting services for a subscription fee.

The last month was a great month for Xero. The cloud-based firm saw its stock appreciated by almost 7% since early mid-October to $148 per share. The outperformance has been driven by a positive reaction to the launch of its app store.

Xero launched its App Store across the ANZ and the UK markets. This is part of the company’s plan to streamline and simplify access to the thousands of apps currently available in its ecosystem. This App Store has a similar model to Apple and Google App store. It charges a 15% fee for app subscriptions purchased through its store.

However, Xero share price slumped along with the broad market correction in September losing all the gains accumulated in August.

Although looking at the long term, we see can only see a positive outcome for Xero. We believe, the recent correction is just a temporary event. Xero remains fundamentally a solid growth stock.

So far, we like the idea of increasing focus on monetising its strong market positions within the ANZ and the UK markets. Accordingly, we think that the incremental revenues will boost Xero to accelerate its ongoing global expansion.

 

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Top 5 ASX Stocks
to Buy for Capital Growth in 2022

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