ASX growth shares that are increasing revenue, achieving higher profit margins, and growing their scale could be potential investment options to consider.
The current volatility may be opening up the opportunity to look at some businesses which are now at a cheaper value than at the start of 2022.
With that in mind, here are two ASX growth shares:
Lovisa Holdings Ltd (ASX: LOV)
The company describes itself as a “fast fashion” jewellery business. It has around 590 global stores across 22 markets.
Lovisa says it is investing in its structures to support future growth. It’s seeing “strong” digital growth and it’s going to keep investing in its digital operations. The company boasts about having a strong balance sheet, with no debt.
It’s going to keep expanding in its current markets such as the US and Europe. During the first half of FY22, it opened 42 net new stores. HY22 also saw sales growth of 36%. It sees opportunities to expand into new markets.
In the first half of FY22, the ASX growth share’s revenue rose by 48.3%, while gross profit increased 50.5% and net profit after tax (NPAT) jumped 70.3%. Lovisa said it has a strong focus on efficiencies while building structure to support the next stage of growth.
Growth has continued into the second half of FY22. Comparable store sales were up 12.1% in the first eight weeks of the second half, but total sales were up 61.7%.
The Lovisa share price closed is currently $14.97, 25% lower than it started the year.
Baby Bunting Group Ltd (ASX: BBN)
Baby Bunting is a retailer that describes its purpose as to support new and expectant parents in the early years of parenthood.
The company has more than 60 stores. It is aiming for at least 100 stores in Australia and at least 10 stores in New Zealand. In the first half of FY22, it opened four new stores.
Baby Bunting sees private label and exclusive products as a way to attract customers as well as achieve a higher gross profit margin. In the first half of FY22, private label and exclusive products made up 44.5% of total sales.
Online sales are also responsible for a long and growing number of sales. First-half online sales increased by 32.6% to $56.8 million, accounting for 23.8% of total sales.
The company continued to grow and achieve operating leverage. Total sales increased 10%, gross profit increased 15.6%, and pro forma net profit after tax rose by 16.5% to $12.5 million. Its market share continues to grow, according to the company. The company also recently opened a new national distribution centre, helping it with costs and becoming more efficient.
The ASX growth share said it is assessing the broader $5.1 billion baby goods market “for future long-term growth opportunities”. It is also investing in its online offering and expanding its online range. It’s also reviewing its network plan to assess opportunities “given its sustained market share growth”.
Using the last two declared dividends, Baby Bunting has a trailing grossed-up dividend yield of 5.2%.
At the time of writing, the Baby Bunting share price is $4.13, 26% lower than at the start of 2022.
Wondering where you should invest $1,000 right now?
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
*Returns as of January 12th 2022
- Top brokers name 3 ASX shares to buy next week
- What’s pushing the Lovisa share price higher on Thursday?
- 3 stellar ASX growth shares analysts are tipping as buys this month
- 2 excellent ASX shares to buy and hold for a decade
- Here are 2 top ASX dividend shares analysts are tipping as buys
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 Baby Bunting and Lovisa Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
from The Motley Fool Australia https://ift.tt/xj3RMI7