Sitting on cash? These 2 ASX shares are great buys today but won’t be forever

With the ASX share market starting to rebound, I think it’s a great time to be looking at ASX shares with good growth potential.

Inflation seems to be peaking in the US and Australia. Although it’s still a long road to a low and healthy inflation rate, progress has been made and this could be a positive thing for investors and shares.

I think the ASX tech shares that have been hit hard but have impressive financials are ones to get excited about. Their long-term outlooks seem very compelling.

Xero Limited (ASX: XRO)

The Xero share price is up by 17% since the start of the year. But, it’s still down around 47% from November 2022.

This ASX tech share provides accounting software for business owners, accountants, bookkeepers, and the like.

With the business still growing, I think the much lower valuation is far more appealing. With a gross profit margin of 87%, any growth the business achieves adds value to Xero.

In the FY23 first-half result to 30 September 2022, the number of subscribers increased 16% to almost 3.5 million, average revenue per user (ARPU) grew 13% to $35.30, and operating revenue surged 30% to $658 million.

Thanks to the growth in the financial measures I just mentioned, Xero’s annualised monthly recurring revenue (AMRR) had reached $1.48 billion at September 2022, suggesting that some growth is already baked in for the next 12 months.

I think it won’t be too long until the Xero share price gets back to above $90 as investor sentiment returns.

Volpara Health Technologies Ltd (ASX: VHT)

This is one of my favourite ASX healthcare shares. It provides software that enables advanced breast screening analysis, with a focus on risk for the patient. Volpara also has operational software for medical professionals to improve their workflow and efficiency.

In the company’s half-year result for the six months to 30 September 2022, it said that 40.5% of US women who had breast screenings had at least one Volpara product applied on their images and data.

Its HY23 gross profit margin was almost 92% – so this is another example of where revenue growth can be a very useful thing for the company’s financials.

In the three months to 31 December 2022, Volpara saw record quarterly cash receipts of NZ$11.2 million. This was an increase of 42% in constant currency terms and enabled the business to achieve its first positive net cash flow quarter on record.

Since the start of 2023, Volpara shares have soared an impressive 49%. Despite that, the ASX share is still down by around 35% since October 2022. With the progress the business is making, I think there’s more to come in the next few years.

The post Sitting on cash? These 2 ASX shares are great buys today but won’t be forever appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• These could be the best ASX 200 growth shares to buy: analysts
• I’m listening to Warren Buffett and buying ASX shares on sale
• Why Centuria Office, Deep Yellow, Newcrest, and Xero shares are racing higher today
• Xero share price jumps 9% to four-month high

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 positions in and has recommended Volpara Health Technologies and Xero. The Motley Fool Australia has positions in and has recommended Volpara Health Technologies and Xero. 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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