2 ASX growth shares rated as buys in January 2022

Stack of coins rising

The ASX growth shares in this article have plenty of growth potential for the long-term. January 2022 could be the month to look for those opportunities.

Some businesses have been growing substantially in recent years but the share price could still be an attractive opportunity.

Analysts currently rate these stocks as buys:

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty is currently rated as a buy by the broker UBS with a price target of $6. That’s 50% higher than it is today. Over the past two months, the Adore Beauty share price has fallen by around 20%.

UBS notes that Adore Beauty continues to grow revenue at a quick pace and noted that it seems like revenue can grow by low double digits over the rest of the year.

In the first three months of FY22, revenue increased by 25% to $63.8 million, whilst active customers grew by 24% to 874,000.

The ASX growth share is working on a number of strategic initiatives – scaling its mobile app, building owned marketing channels and community, and expanding its loyalty program.

Adore Beauty is continuing to benefit from the ongoing structural shift to online shopping, which has been accelerated by COVID-19 (and lockdowns).

Management are focused on its growth strategy to cement its online market leadership.

The company’s first private label brand is on track to launch in the third quarter of FY22. This could help with both margins and revenue.

EML Payments Ltd (ASX: EML)

EML Payments is an ASX growth share which helps process various digital payments for companies, governments and other organisations. Some of its use cases includes banking as a service, shopping centre gift cards, employer incentives, commercial payments and buy now, pay later.

UBS also rates EML as a buy, with a price target of $4.40 which is more than 33% higher than right now.

The broker thinks that the Central Bank of Ireland (CBI) correspondence is an important positive.

Two of the updates from the correspondence included that CBI will permit EML’s PFS Card Services (Ireland) Limited (PCSIL) to sign new customers and launch new programs whilst staying within the material growth restrictions. PCSIL is confident that it can meet these obligations.

Second, broad based reductions in limit controls on programs will not be imposed. The CBI said it’s satisfied to continue to engage with PCSIL with a view to agreeing appropriate limits.

However, the CBI intends to have a material growth limitation over PCSIL’s total payment volumes imposed for 12 months or rescinded earlier after third party verification to confirm its remediation plan has been effectively implemented.

The ASX growth share said that the CBI has invited PCSIL to provide it with submissions about growth limits, which it intends to do so by 30 November 2021.

According to UBS, the EML share price is valued at 27x FY23’s estimated earnings.

The post 2 ASX growth shares rated as buys in January 2022 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia owns and has recommended EML Payments. The Motley Fool Australia has recommended Adore Beauty Group Limited. 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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