There’s one S&P/ASX 200 Index (Index:^AXJO) stock that’s likely to beat consensus forecast when it hands in its profit report card in August.

I am not talking about Qantas Airways Limited (ASX: QAN) or Corporate Travel Management Ltd (ASX: CTD) – although they could surprise as COVID-19 travel restrictions ease.

The one that could pull an earnings rabbit out of its hat is BlueScope Steel Limited (ASX: BSL), at least that’s according to Credit Suisse.

Too much bad news in the share price

The broker reviewed its forecasts across the steel products manufacturer’s business segments and accounted for steel spreads and the coronavirus impact.

This led to Credit Suisse lowering its second half FY20 earnings before interest and tax (EBIT) estimates to $506 million, but that’s still 22% higher than the average broker forecast for the same period.

Volumes at BlueScope’s Australian Steel Products division isn’t expected to be too badly hit by the COVID-19 fallout in the current half.

This is because of the long lead times for construction projects where work scheduled for this period would have continued.

Impact from COVID-19

“We do, however, see risk to 1H21 volumes, factoring in the time lag from COVID-19 on future activity decisions, particularly around the Alterations & Additions market which accounts for ~20% domestic volumes,” said Credit Suisse.

On the other hand, I believe the government’s $688 million HomeBuilders stimulus could provide some support for volumes in the new financial year.

Meanwhile, Credit Suisse is forecasting a utilisation rate of 85% for BlueScope’s US business, North Star, as it believes the March quarter should be “solid” as the COVID-19 shutdown had yet to come into effect.

April and May would be quite a different story although the US is restarting its industries since.

Why BlueScope could beat consensus

“At current levels, the market appears to be pricing in depressed FY20/21 earnings in perpetuity, an unrealistic future outcome, in our view,” said the broker.

“While the current trading climate is challenged with uncertainty around COVID-19’s impact and duration, we see a clear value opportunity on even partial restoration towards what could be considered reasonable mid-cycle trading conditions and earnings.”

The broker rates the stock as “outperform” (meaning a “buy”) with a price target of $12.80 a share.

Buying opportunity for patient investors

But if the business returns to its post-coronavirus glory, the stock could be worth as much as $15 a share, based on Credit Suisse’s estimates.

While no one knows when that might happen, it goes to show that BlueScope is a value buy for patient investors as the full recovery is a question of “when” and not “if”.

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Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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As a big fan of growth shares, I feel quite fortunate that the Australian share market is home to a large number of them.

Three quality ASX growth shares that I would buy this week are listed below. Here’s why they could be future market beaters:

Appen Ltd (ASX: APX)

Appen is one of my favourite growth shares on the ASX. It prepares the data that goes into artificial intelligence (AI) and machine learning models. This is a key part of the process, as high quality data is vital for successful models. And given how important AI is becoming to businesses, I expect demand for Appen’s services to continue to grow over the next decade. This should underpin strong earnings growth for a long time to come.

Nanosonics Ltd (ASX: NAN)

Another ASX growth share which I think is a great option for investors is Nanosonics. The infection control specialist has been growing exceptionally strongly in recent years thanks to the increasing market share of its trophon EPR system. This disinfection system for ultrasound probes is the best in its class and has a material global market opportunity. However, it won’t be the only thing driving Nanosonics’ growth in the coming years. The company is due to release new products that are targeting unmet needs in the near future. If these are half as successful as the trophon EPR system, then Nanosonics will have a very bright future.

Xero Limited (ASX: XRO)

A third ASX growth share I would buy is Xero. I think the cloud-based business and accounting software provider is one of best growth shares on the ASX and well-placed to be a long term market beater. This is due to the increasing popularity of its platform with small businesses, its high retention rate, and the stickiness of its product. And although Xero now has ~2.3 million subscribers globally, this is still only scratching at the surface of a massive global market opportunity. 

More reading

• Are Megaport shares the ones to buy and hold beyond 2030?
• 3 large cap shares beating the ASX 200 this year
• Should the Xero share price have a P/E ratio of 4,000?
• 2 cheap ASX 200 shares to buy right now
• ASX 200 investor in your 40s? 3 shares to buy now

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited and Xero. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 stellar ASX growth shares I would buy right now appeared first on Motley Fool Australia.

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