2 great ASX growth shares to buy

There are some great ASX growth shares that could be able to generate good returns over the coming years.

Some companies have impressive business models and good profit margins. If they operate in a market with a large addressable market they may be able to create good profit growth.

These two ASX growth shares are interesting options:

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a health technology software business. Its clinical functions for screening clinics provide feedback on breast density, compression, dose, and quality.

The ASX share also has enterprise-wide practice-management software that helps with productivity, compliance, reimbursement and patient tracking.

Volpara can grow its business in a few different ways. Two of them are that it can increase its market share, as well as improving its average revenue per user (ARPU).

In the fourth quarter of FY21, the business revealed that its market share had increased to 32% of US women screening for breast cancer. That’s where at least one software product has been used in the screening.

The ARPU increased to US$1.40 in the fourth quarter, up from US$1.22 at the end of the third quarter of FY21.

That FY21 fourth quarter saw the business reveal that its annual recurring revenue (ARR) increased to US$18.6 million, which included a 20% organic year on year increase.

The ASX growth share won its largest contract to date a few weeks ago. There was also multiple existing customers expanding, as well as some major new deals with prominent academic centres.

The business sees tailwinds in the US. Its focus is shifting to risk and genetics for FY22 as it seeks to accelerate sales growth.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

This exchanged-traded fund (ETF) gives investors the opportunity to invest in a group of the largest and most liquid companies involved in video game development, e-sports and related hardware and software globally.

Video gaming has been around for a long time, but the current operating models of some businesses are even more profitable now.

There is a growing trend of competitive e-sports with large audiences. The technology nature of the underlying businesses means plenty of the 25 holdings have high profit margins compared to a typical listed business.

Some of the top holdings include: Nvidia, Tencent, Advanced Micro Devices, Sea, Nintendo, Activision Blizzard, Netease, Take Two Interactive Software, Nexon and Electronic Arts.

There are three countries that have a weighting of more than 10%, they are: the US (38.5%), Japan (21.1%) and China (18.4%).

As the ETF is so new, investors may want to look at the index returns that it tracks. The index has delivered an average return of 30.9% per annum over the last three years. Don’t forget that VanEck Vectors Video Gaming and eSports ETF has annual management costs of 0.55% per annum. The fees detract from the net returns for investors. 

More reading

• Is this new ASX eSports ETF a winner?
• 2 exciting ETFs ASX investors need to know about
• Got money to invest? Here are 2 ASX shares to buy
• Volpara (ASX:VHT) share price rising following Q4 business update
• 3 growing small cap ASX tech shares to watch

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF and VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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