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ASX growth stocks are attractive potential investments if they are able to deliver strong compound growth over the long term. I think September could be a good time to buy stocks because of the volatility and price decline we are seeing.
Uncertainty has increased in an environment of rising inflation and rising interest rates. Investors drove down stock price values.
With much cheaper prices, I think it’s definitely worth considering some of these names that benefit from revenue growth and scale. Here are two to consider:
Adore Beauty Group Ltd (ASX: ABY)
Adore Beauty is a leading e-commerce company selling over 12,000 products from a diverse portfolio of over 270 brands.
The company has been growing at a steady pace for several years. FY22 revenue increased 11% to $200 million and 65% from FY20. The company attributed this growth to “loyal valued customers with higher average order values.” Loyal customers increased 31% to 472,000 and 115% from FY20. Loyal customers contributed 70% of all revenue, compared to 62% in FY21. Its mobile app contributed 11% of total revenue.
I think the company has a lot of growth potential due to the steady shift from retail beauty purchases to online purchases, where Adore Beauty is the leader. Margins can increase in the long run as Adore Beauty manages to connect with more customers through its free channels such as podcasts and its loyalty program. Scale will also naturally contribute to profitability in the years to come.
Another positive for ASX share growth is the launch of the first own brand called Viviology – private labels can achieve higher margins.
While near-term revenue can be volatile, I think it’s encouraging that the company expects to return to double-digit revenue growth in the second half of FY23.
Betashares Global Cybersecurity ETF (ASX:HACK)
It is an exchange-traded fund (ETF) that operates a very interesting theme. The world is becoming increasingly complex and digital. It is very important for governments to protect their citizens’ information and for companies to protect customer details.
But cybercrime is also growing. For example, the Australian Cyber Security Center (ACSC) reported that in FY21, it received more than 67,500 cybercrime reports, an increase of nearly 13% over the prior fiscal year. The CCAA said:
The increasing frequency of cybercriminal activities is compounded by the increased complexity and sophistication of their operations. The accessibility of cybercrime services – such as ransomware as a service (RaaS) – via the dark web is increasingly opening up the market to a growing number of malicious actors without significant technical expertise and significant financial investment.
This is where cyber defense companies come in. There is a group of companies that are dedicated to protecting organizations and individuals from cybercrime.
The Betashares Global Cybersecurity ETF provides investors with access to a portfolio of cybersecurity companies from around the world, including: Crowd, Cloudy, Palo Alto Networks, Z-scale, Cisco Systems, Booz Allen Hamilton, SentinelOne, Verisign, and Cyberark Software.
ASX growth share has managed annual net returns of 14.9% per year for the previous three years. While past performance is certainly no guarantee of future returns, I think it shows how well the underlying companies have performed. The sector is expected to grow from US$137.6 billion in 2017 to US$248.3 billion in 2023, according to Statista.