Potential buys: 2 excellent ASX shares

ladder leading up to open window representing buying opportunity for asx shares

There aren’t too many ASX shares around that have major growth plans over the coming years. But the ones that do could be attractive potential opportunities.

Businesses that are smaller in size compared to a blue chip can have much more growth potential because they’re starting off at a much smaller point.

These two ASX shares could be very good options:

City Chic Collective Ltd (ASX: CCX)

City Chic is a leading ASX retail share that specialises in selling clothes, footwear and accessories to plus-size women.

It has a variety of brands for different products and markets including City Chic, Avenue, City Chic, Evans, Hips & Curves and Fox & Royal.

Since 22 November 2021, the City Chic share price has actually dropped by 15%, presenting a better value entry point for investors.

Plenty of investors like this ASX share at the moment, including the brokers UBS and Morgan Stanley which both have share price targets that are around 20% higher than where the Webjet share price is today.

A large part of the company’s earnings comes from online sources. In FY21, online sales made up 73% of its total revenue. Its online sales grew by 49.3% last financial year.

The company is working on a number of initiatives including expanding and executing on marketplace partnerships in all regions, increasing market share in the US, integrating its European Navabi acquisition and introducing its wider product range to the European market, and reviewing more acquisition opportunities.

The latest City Chic share price is valued at 28x FY23’s estimated earnings according to UBS.

Webjet Limited (ASX: WEB)

Webjet is a large travel ASX share that offers services for the public and also business to business services (WebBeds).

The company sees significant growth opportunities in all of its businesses as global travel markets start to reopen.

WebBeds is on track to be 20% more cost efficient when at scale. In November, Webjet said that WebBeds had been profitable since July thanks to domestic North American and European markets.

The ASX share sees increasing market opportunities for WebBeds with channel expansion, targeting previously untapped domestic markets and increasing market share in North America.

When WebBeds gets back to scale, it’s targeting an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 62.5%. This translates to EBITDA being 5% of total transaction value (TTV).

Management thinks the Webjet online travel agency (OTA) segment has market share growth potential thanks to consumer preferences shifting to online as well as investing in international opportunities.

Whilst the Omicron COVID-19 variant may have changed the situation a bit, Webjet noted that in November 2021 its TTV was tracking at 63% of pre-COVID times and bookings were tracking at 69% of pre-COVID levels, with many larger markets yet to open.

Webjet thinks that the business to business TTV market value is now more than A$70 billion and it’s targeting a market share of 14% of this (up from 4% in FY19). In dollar terms, it is targeting $10 billion of TTV.

This ASX share is a buy according to UBS, which has a price target of $6.85 on the business. That implies a potential upside of more than 30% over this year.

The post Potential buys: 2 excellent ASX shares appeared first on The Motley Fool Australia.

Should you invest $1,000 in City Chic right now?

Before you consider City Chic, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and City Chic wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. 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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