Top ASX growth shares to buy in April 2023

Some ASX growth shares have taken a proper beating over the last couple of years. Rising interest rates, the increased cost of debt, and macroeconomic uncertainty have culminated in reduced investor appetite for risk.

This has sent the market capitalisations of some reputable ASX growth companies plummeting since the heady highs of the post-COVID boom.

But on a positive note, it could mean there are now some cracking buys to be had.

If you’re considering feathering your investment nest with some good eggs this month, check out the following. Because we asked our Foolish writers which ASX growth shares they reckon are worth hopping into in April.

Here is what the team came up with:

7 best ASX growth shares for April 2023 (smallest to largest)

Temple & Webster Group Ltd (ASX: TPW), $429.09 million

Westgold Resources Ltd (ASX: WGX), $615.71 million

Lovisa Holdings Ltd (ASX: LOV) $2.7 billion

Pro Medicus Limited (ASX: PME), $6.75 billion

Xero Limited (ASX: XRO), $13.63 billion

Mineral Resources Ltd (ASX: MIN), $15.57 billion

Aristocrat Leisure Limited (ASX: ALL), $24.72 billion

(Market capitalisations as at market close on 4 April 2023)

Why our Foolish writers love these ASX growth stocks

Temple & Webster Group Ltd

What it does: Temple & Webster describes itself as Australia’s largest pure-play retailer of furniture and homewares. There are more than 200,000 products on the company’s websites, including home improvement products on The Build.

By Tristan Harrison: The Temple & Webster share price has dropped by around 50% over the past year. I think this makes the stock a pretty good value buy right now. Particularly considering the company continues to invest heavily for growth over the long term across areas like technology, customer service, and efficiencies.

Moving forward, I think more and more people will shop online in Australia. In 2021, around 15% to 17% of furniture and homewares sales were transacted through e-commerce, whereas in the United States, it was between 25% to 27%. This suggests a real possibility for major growth of the online furniture market in Australia over the coming years.

Temple & Webster management also expects significant improvement in profit margins as the company grows. In fact, in its FY23 half-year results, Temple & Webster said it expected the company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) margin to rise to at least 15% in the longer term, up from 3.8% in FY22.

Motley Fool contributor Tristan Harrison does not own shares in Temple & Webster Group Ltd.

Westgold Resources Ltd

What it does: Westgold Resources is a small-cap Aussie gold miner and explorer active in the Murchison region of Western Australia. It operates open pit mines, underground mines, and three processing plants in the state.

By Bernd Struben: I believe Westgold Resources is an excellent ASX growth share to take advantage of likely sustained strength in the gold price. Gold has benefitted from rising global uncertainties that are unlikely to subside soon.

Westgold has been battling industry-wide cost pressures that caused a 17% year-on-year cost increase in the first half of FY23. However, the profit outlook looks stronger as the miner has flagged ongoing reductions in production costs in FY24.

Westgold’s Big Bell mine also appears to be an increasingly valuable asset. Recent drilling uncovered high-grade potential exceeding the miner’s pre-feasibility study estimates. Big Bell is also producing beyond forecasts, delivering 8,447 ounces of gold in January and 7,895 ounces in February.

The Westgold share price is up by around 47% in 2023.

As at 31 December, the miner held $144 million in cash.

Motley Fool contributor Bernd Struben does not own shares in Westgold Resources Ltd.

Lovisa Holdings Ltd

What it does: Lovisa is an Aussie-born fashion jewellery retailer with a burgeoning global presence.

By Brooke Cooper: Lovisa doesn’t fit the typical ASX growth-share mould – its share price has gained more than 170% over the last five years, leaving it with a market cap of $2.7 billion.

However, the company has a track record of rolling out new stores around the globe (more than 700 and counting) and plans to keep that momentum going.

That, of course, means costs (and risk) will likely remain high for some time. But looking long term, I think the share could be gearing up for more major gains.

And I’m not alone. Morgans has a $28.50 price target on the stock – representing a potential 11.3% upside at yesterday’s closing price.

Motley Fool contributor Brooke Cooper does not own shares in Lovisa Holdings Ltd.

Pro Medicus Limited

What it does: Pro Medicus provides medical imaging software to hospitals, healthcare organisations, and imaging centres worldwide. The underlying innovation making Pro Medicus stand out from the competition is its cloud-based picture archiving and communication system (PACS) – an industry-first technology when introduced. In simple terms, it allows enormous medical files to be viewed effortlessly by radiologists and clinicians.

By Mitchell Lawler: On initial inspection, this S&P/ASX 200 Index (ASX: XJO) growth share might appear extremely expensive. How could anyone justify a price-to-earnings (P/E) ratio of nearly 135 times? 

The company’s revenue has been growing rapidly, increasing from $34 million in FY18 to $94 million in FY22. During this time, Pro Medicus’ income margin has also expanded from 26.7% to 47.2%. All else being equal, the net margin should continue to grow as Pro Medicus wins more contracts. 

In my opinion, this means the earnings multiple could compress quickly as long as the healthcare company continues to secure additional contracts. Fortunately, the market opportunity is still large for Pro Medicus, with 11 of the top 20 hospitals in the United States yet to use the company’s Visage 7 software. 

Disclosure: Motley Fool contributor Mitchell Lawler owns shares in Pro Medicus Limited.

Xero Limited

What it does: Xero is a provider of online accounting and bookkeeping software. The ASX tech company employs a software-as-a-service (SaaS) model.

By Sebastian Bowen: Xero is an ASX 200 growth share that looks attractive to me in April. This provider of online accounting and bookkeeping software has had a couple of rough years and is now sitting more than 40% off of its all-time high that we saw back in early 2018. 

But I still see a lot of promise in Xero shares. Tax requirements worldwide continue to move towards digital reporting, which gives Xero a powerful tailwind to sit in. 

But this is evident in the company’s numbers as well. Back in November, Xero reported a 13% year-on-year increase in average revenue per user, as well as a 30% rise in revenues and a 16% boost in subscribers. 

So, all in all, I believe Xero is an ASX growth stock worth a deeper dive into this month. 

Motley Fool contributor Sebastian Bowen does not own shares of Xero Limited.

Mineral Resources Ltd

What it does: Mineral Resources is an ASX 200 diversified mining company with four key divisions: iron ore, lithium, energy (gas), and mining services.

By Bronwyn Allen: ASX lithium shares are somewhat out of favour with investors following an amazing run in 2021 and 2022, which coincided with skyrocketing lithium commodity prices.

Today, UBS is warning that supply could double by 2025, with many new lithium mining companies coming to the fore, and Goldman Sachs thinks lithium prices are going to crater. But these predictions are short-term in nature, while the electrification trend is long-term.

Australia is already the world’s largest lithium exporter, and I believe it’s large-scale producers like Mineral Resources that have the advantage over start-ups still building their mines.

The company has a stake in two lithium mines in Western Australia – one in partnership with US lithium giant Albemarle Corporation, the other in partnership with Chinese behemoth Ganfeng Lithium Group.

In the first half of FY23, Mineral Resources brought in $997.2 million in revenue from its lithium operations alone. This was up from $143 million a year earlier and represented 42% of the company’s overall revenue.

I think Mineral Resources is a great lithium play because its assets are located in Australia, and its partners are huge corporations domiciled in two of the world’s biggest lithium markets. I also like that MinRes is diversified across iron ore, gas, and mining services, so it can benefit from the lithium trend without being entirely reliant on it like the ASX pure-play producers. 

Motley Fool contributor Bronwyn Allen does not own shares in Mineral Resources Ltd.

Aristocrat Leisure Limited

What it does: Aristocrat is a gaming technology company with a world-class portfolio of poker machines, mobile games, and real money games.

By James Mickleboro: Although the Aristocrat share price is smashing the market this year, I don’t believe it’s too late to invest. This is due to the company’s attractive valuation and positive long-term growth outlook.

With respect to the former, Aristocrat shares are changing hands for a touch over 18x estimated FY2023 earnings, according to Citi.

As for the latter, with gaming largely recession-proof, Aristocrat continuing to win market share, and its recent expansion into real money gaming, I believe the company is well-placed for growth over the remainder of the 2020s.

Citi appears to agree, and currently has a buy rating and $42.80 price target on Aristocrat shares. It notes that “Aristocrat has also extended its performance gap to peers, coinciding with further market share gains in the premium-leased segment”.

Motley Fool contributor James Mickleboro does not own shares in Aristocrat Leisure Limited.

The post Top ASX growth shares to buy in April 2023 appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 lithium shares having such a miserable week?
• ASX 200 rebounds after RBA hits pause on its rate hikes
• Morgans names 3 more of the best ASX 200 shares to buy in April
• Could this further cloud the outlook for ASX 200 lithium shares?
• These are the 10 most shorted ASX shares this week

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, Pro Medicus, Temple & Webster Group, and Xero. The Motley Fool Australia has positions in and has recommended Pro Medicus and Xero. The Motley Fool Australia has recommended Lovisa and Temple & Webster Group. 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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