I’m always interested in companies with the potential to become much bigger businesses over time.

And right now, there are two ASX shares that I think have particularly exciting growth prospects.

Here’s why I would be happy buying them today.

Zip Co Ltd (ASX: ZIP)

Zip is a share I think has plenty of growth ahead of it, especially in the United States.

The buy now, pay later provider has established a growing presence in the American payments market, giving it access to an enormous pool of potential customers and merchants.

What I like is how much more business Zip could generate through its existing platform. As it attracts new merchants and increases transaction volumes, there is an opportunity to generate additional revenue without costs increasing at the same rate.

That could support considerable earnings growth over the next few years. And I think the current valuation makes that opportunity worth considering.

With Zip shares around $2.15, they are trading on a PE ratio of 14 times consensus FY27 earnings, falling to less than 10 times FY29 earnings. I think that could prove very cheap if the company delivers on market expectations.

Of course, there are challenges. Higher interest rates could make funding more expensive and put pressure on Zip’s margins. They could also place additional strain on customers, potentially leading to higher bad debts.

That makes disciplined lending particularly important as the company expands. But if Zip can keep growing its share of the enormous US market while maintaining credit quality, I think shareholders could be rewarded handsomely.

DroneShield Ltd (ASX: DRO)

DroneShield is another ASX share I would buy, although I think it requires considerable patience. The counter-drone technology company’s shares are trading around $1.48 on Tuesday, having fallen sharply from their previous highs.

That weakness comes despite what I believe is an increasingly important long-term market opportunity. Drones have become a major part of modern warfare, and governments are investing in technology capable of detecting and defeating them.

DroneShield has developed a range of systems designed to address these threats, and its growing presence in international defence markets could support substantial sales growth.

The opportunity now is to turn its expanding sales pipeline and procurement agreements into meaningful contracts.

Valuation is a challenge, with DroneShield trading on a very high forward PE ratio. But I don’t think that is the best way to assess the company at this stage.

In some ways, DroneShield reminds me of Zip shares during its earlier rapid-growth phase, when building the business and expanding its market presence were major priorities.

What I want to see is DroneShield developing the scale to convert growing demand into substantial, sustainable profits.

That is far from guaranteed. Defence orders can be unpredictable, competition is increasing, and the company still has execution and regulatory uncertainties to resolve. Nevertheless, I think the potential rewards justify considering the shares as a higher-risk investment.

Foolish takeaway

I would be happy buying both Zip and DroneShield shares today.

There is plenty that could go wrong, but I think both companies have opportunities to become much larger businesses over the coming years.

For investors comfortable with volatility and prepared to take a long-term view, I believe they could deliver excellent returns.

The post Why I'd buy Zip and DroneShield shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ANZ Group Holdings Ltd (ASX: ANZ) has plenty happening behind the scenes.

The banking giant is working to simplify its operations, improve efficiency, and make better use of its position in the Australian and New Zealand markets.

But with interest rates rising and the economic outlook remaining uncertain, is now a good time to buy ANZ shares? Here’s my view.

Why I like ANZ shares

One reason I like ANZ shares is the variety of businesses it operates.

Alongside its Australian mortgage and deposit operations, ANZ has a substantial banking business in New Zealand and a well-established institutional division serving large companies across international markets.

I think that provides several opportunities to generate earnings and build stronger customer relationships.

But what interests me most today is the work management is doing to improve the business. ANZ has been implementing its ANZ 2030 strategy, which aims to simplify the bank, reduce costs, and improve customer experiences.

A significant part of this involves integrating Suncorp Bank and bringing customers onto ANZ’s existing systems. Management is targeting substantial annual cost savings from the integration, with the full benefits expected towards the end of the decade.

I think there is considerable potential here. If ANZ can reduce duplication, improve its technology, and operate more efficiently, it could generate stronger returns from its existing businesses.

That gives me a reason to be positive about its longer-term prospects.

What about the economic outlook?

The next year could still be challenging for ANZ.

Australian interest rates have been rising as the Reserve Bank attempts to bring inflation under control, with further increases possible.

Higher rates can help banks earn more from lending, particularly when their funding costs increase more slowly. But competition for mortgages and deposits can limit those benefits. 

Higher borrowing costs can also reduce demand for new loans and put pressure on households and businesses. I think that helps explain why analysts are expecting relatively little earnings growth in the near term.

Consensus forecasts point to earnings per share of approximately $2.57 in FY26 and $2.55 in FY27. That is hardly an exciting outlook, but I think it is important to look beyond the next financial year.

The benefits of ANZ’s transformation should become more meaningful as its integration and efficiency programmes progress. For me, that provides an opportunity for earnings to improve over the following years.

Is the price reasonable?

ANZ shares are currently trading around $38.86. Based on consensus forecasts, that puts the bank on a price-to-earnings ratio of approximately 15 times FY27 earnings.

I think that is a reasonable price for a major Australian bank with opportunities to improve profitability.

There is also a healthy dividend on offer. Analysts expect ANZ to pay $1.66 per share in dividends in both FY26 and FY27, representing a dividend yield of approximately 4.3% at today’s price.

That provides some income while investors wait for the bank’s transformation to deliver results.

Foolish takeaway

I would be happy buying ANZ shares around $39.

I’m not expecting particularly strong earnings growth in 2027, but I think the work management is doing could leave ANZ in a much better position over the next few years.

With a reasonable valuation and a healthy dividend, I think there is enough on offer to make it worth buying today.

The post Is now a good time to buy ANZ shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Woolworths Group Ltd (ASX: WOW) shares are up around 1% to $41.66 at the time of writing on Tuesday afternoon.

At one point earlier this morning, the shares were trading at an all-time high of $41.78 a piece.

The shares have spiked 9% higher over the past two weeks alone, and they’re now up an impressive 41% for the year-to-date.

What has sent Woolworths shares flying higher?

The supermarket giant hasn’t posted any price-sensitive news since its FY26 results announcement in August.

The sky-high share price has most likely been driven by renewed investor confidence that the company’s turnaround story is finally coming to fruition, after a difficult period in 2025.

In late-August, Woolworths posted a 3.6% year-on-year increase in sales and a 6.7% increase in EBITDA (before significant items). On the bottom line, Woolworths achieved a 15.4% increase in its NPAT (before significant items) for the year. Management also declared a 52-cent per share dividend, up 15.6% from FY25.

There has clearly been a shift in investor sentiment, and I think more recently a sector-wide investor rotation towards more defensive assets (and away from riskier or high growth shares), and some fresh economic data, has helped to propel the share price higher.

Last week, The Australian Bureau of Statistics (ABS) released data showing that, in seasonally adjusted terms, Australia’s employment rate increased by 0.1 percentage point to 4.7% in September. 

This has significantly boosted investor confidence that the Reserve Bank will decide to hold interest rates steady at its next meeting on the 3rd of November, rather than implement another hike as originally feared.

Less chance of another near-term interest rate hike has eased financial pressure on households. This is great news for an ASX consumer staples stock like Woolworths. As the company also leases large-scale stores, warehouses and distribution centres, it is highly sensitive to higher interest rates and higher lease costs.

The shares could also be climbing higher ahead of the company’s first-quarter FY27 update and annual general meeting. These are scheduled for the 28th and 29th of October, respectively.

Are the supermarket shares a buy, sell, or hold now?

According to expert forecasts, Woolworths shares are trading above fair value and we could see a correction ahead.

Market Index data shows brokers are split between a hold and a sell rating. However, the $37.73 average target price implies a downside of around 9%, at the time of writing.

Sentiment is similar on TradingView, although the majority (nine out of 17) have a hold rating on the shares. Another six rate Woolworths as a sell/strong sell and two have a buy rating.

The average $39.71 target price, however, still implies a downside of around 4%, at the time of writing.

The post Woolworths shares jump 9% to all-time high: Buy, sell or hold? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.