I love finding ASX growth shares that have the capability to deliver impressive financial growth in their results, leading to pleasing share price growth.
It’s easy enough to identify highly-followed businesses with fairly (or very) expensive valuations that reflect their potential growth for the foreseeable future, such as Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC).
Investors may be able to outperform the market if we can find stocks that represent growth at a reasonable price (GARP). In other words, the valuation is appealing for how much earnings growth they may be able to deliver in the next few years.
With that in mind, I believe these three ASX growth shares are very compelling to buy this month.
Close The Loop Ltd (ASX: CLG)
This company works in multiple countries, enabling increased product and economic circularity. One of its main offerings is collecting and refurbishing old electronics.
Close The Loop is a key partner of HP, which has a publicly stated goal of achieving 75% circularity for its products and packaging by 2030. HP ships approximately 40 million PCs annually, with an estimated 300 million HP PCs in the current market, in addition to its various printers and other products.
Close The Loop is the first provider to be appointed as ‘HP Platinum Global Certified Renew Partner’. There is significant potential here.
The ASX growth share hopes to work with other original equipment manufacturers (OEMs) in the future, which could unlock further growth for the business. A new IT refurbishment plant in Mexico will be running by October 2024.
The ASX growth share will also construct a second TonerPlas line after the government awarded $2.2 million in funding. Tonerplas is an additive that increases the longevity of asphalt, which is formulated from a mixture of post-consumer soft plastics and print toner.
According to Commsec, the company is expected to grow its earnings per share (EPS) by 23% between FY24 and FY26. It’s valued at under 7x FY24’s forecast earnings.
Collins Foods Ltd (ASX: CKF)
This ASX growth share is a multinational franchisee operator of KFC outlets in Australia, the Netherlands and Germany.
KFC is a strong brand, and Collins Foods is benefiting from the continuing growth of KFC outlet numbers. In the FY24 result, the ASX share increased revenue by 10.4%, and underlying net profit after tax (NPAT) increased by 15.6%.
During the HY24 period, the company added nine new builds in Australia, bringing the total to 279, and 11 restaurants in the Netherlands (eight acquired and three new builds).
If the Australian and European KFC networks keep growing, then its scale benefits and margins can continue improving. I liked that underlying profit rose faster than revenue, displaying operating leverage.
The forecast on Commsec suggests EPS could grow to 65.8 cents by FY26 (with 21% EPS growth in FY26). This puts it at just 13x FY26’s estimated profit.
Corporate Travel Management Ltd (ASX: CTD)
This ASX growth share provides corporate travel management services. Although the business is facing an uncertain economic environment at the moment, management is confident in the longer term.
From FY25, Corporate Travel aims to grow its revenue by 10% per annum over the next 10 years, partly through winning $1 billion in new clients each year. Any acquisitions made would be in addition to this growth.
The company is working on efficiencies and cost savings to help improve its earnings before interest, tax, depreciation and amortisation (EBITDA) margin. It wants 50% of every new dollar of revenue to fall to EBITDA. This could mean EBITDA grows at a compound annual growth rate (CAGR) of 15% over the next five years.
According to Commsec, the company is projected to grow its EPS by 25% between FY24 and FY26. This would put it at 13x FY26’s estimated earnings.
The post 3 of the best growth-focused ASX shares to buy in July appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has positions in Close The Loop and Collins Foods. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Close The Loop, Corporate Travel Management, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Corporate Travel Management, WiseTech Global, and Xero. The Motley Fool Australia has recommended Close The Loop and Collins Foods. 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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