Triple-digit growth: 2 ASX shares Elvest is investing in for the long haul

In the chaos of 2022, investors of ASX shares can fall prey to a massive psychological trap.

That’s focusing too much on macroeconomic factors such as inflation, interest rates and recessions.

Yes, they matter — but so does the internal performance of the business.

Because there has been so much upheaval in the world making the news feeds this year, this seems to have been forgotten in many people’s minds.

That’s why it’s worth listening to the portfolio managers at Elvest Fund, who recently pointed out two businesses it holds that have shown triple-digit percentage growth.

Regardless of the external factors, such fast-growing enterprises have a great chance of delivering value back to investors.

Tripling its earnings this financial year

RPMGlobal Holdings Ltd (ASX: RUL) provides technology and consulting to the mining industry.

For an ASX technology share, its price has remained relatively resilient. There’s been a 24% resurgence since early October, leaving it just 12% lower than where it started the year.

The Elvest analysts told clients that the company is at a crossroads.

“At its AGM, RPMGlobal provided a solid trading update and reiterated FY23 guidance,” read the memo.

“RPMGlobal is at an earnings inflection point, reflecting business maturation and growing demand for its mining operations software.”

It was one of Elvest Fund’s best performers last month, but with a sensational financial year under way, the team will keep riding it all the way home.

“The company is on track to deliver EBITDA of $14.2 million this financial year, up 215%.”

While coverage remains sparse for RPMGlobal, CMC Markets reports analysts at both Moelis Australia and Veritas rate the stock as a strong buy.

Forager Funds Management portfolio manager Alex Shevelev last week, without hesitation, named RMPGlobal as the stock he would hold for the next four years.

“Great management team, plenty of skin in the game and it may well be, given all the corporate activity in the space, that the business wouldn’t be around in four years in any case.”

‘Significant lift in free cash flow’ next two years

Smartpay Holdings Ltd (ASX: SMP) is a New Zealand company that provides point-of-sale payment terminals.

While the majority of its revenue comes out of its home country, the Australian operations are seeing explosive growth.

“Smartpay provided another strong quarterly trading update, with consolidated revenue up 91% year-on-year, driven by 145% growth within the Australian division,” read the Elvest memo.

The Smartpay share price is up almost 8% year to date, after enjoying a 24% rally since mid-October.

The future is looking bright with the ASX share’s zero-cost product ‘Smartcharge’ striking a chord with merchants, according to Elvest analysts.

“The business has healthy momentum heading into the seasonally stronger December quarter,” the memo read.

“Continued execution should drive a significant lift in free cash flow over the next two years.”

The $200 million business, much like RPMGlobal, is not yet attracting much analyst attention.

But according to CMC Markets, both Blue Ocean Equities and Shaw & Partners are recommending this ASX share as a strong buy.

The post Triple-digit growth: 2 ASX shares Elvest is investing in for the long haul appeared first on The Motley Fool Australia.

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More reading

• The ASX share I’d hold onto for dear life: fund manager
• Fundie reveals 3 ‘top notch’ ASX shares to buy right now
• This embattled ASX All Ords mining share is gearing up to be a FY23 winner: fundie

Motley Fool contributor Tony Yoo has positions in RPMGlobal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended RPMGlobal Holdings. The Motley Fool Australia has recommended RPMGlobal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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