I’m a big fan of growth shares and feel lucky to have so many to choose from on the Australian share market.

But with so many options, it can be hard to decide which ones to buy.

Three top ASX growth shares that I think should be considered are listed below. Here’s why I would be a buyer of these shares:

a2 Milk Company Ltd (ASX: A2M)

One of the best growth shares on the local market could be a2 Milk Company. Over the last few years the infant formula and fresh milk company has grown at a rapid rate thanks largely to the success of its A2-only offering with Chinese consumers. The company’s products exclude the A1 protein from cow’s milk which some people are believed to have problems consuming. Demand continues to rise for its products, leading to management recently upgrading its guidance for the full year. The top end of its guidance range implies year on year revenue growth of 34.1% and EBITDA growth of 35.4%. Given its modest market share, I believe a2 Milk Company still has a long runway for growth.

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

If you would like to invest in growth shares outside Australia, then you could invest in some of the fastest growing tech companies in the Asia market with the BetaShares Asia Technology Tigers ETF. Through a single investment investors can gain exposure to companies that are revolutionising the lives of billions of people in the region. This includes ecommerce giant Alibaba, search engine company Baidu, and new Afterpay Ltd (ASX: APT) shareholder and WeChat owner, Tencent.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Another option for growth investors to consider is Domino’s Pizza. I think it could generate market beating returns for investors over the next decade thanks to its bold same store sales and store expansion targets. Over the next five years the pizza chain operator is aiming to deliver annual same store sales growth of 3% to 6% and annual organic new store additions of 7% to 9%. If it delivers on this, I expect it to underpin strong earnings growth for the foreseeable future.

More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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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A large portion of the Australian economy is reliant on tourism and high value exports such as tertiary education. With the coronavirus pandemic effectively shutting down the majority of the economy, Australia’s mining sector has remained a pillar of strength.

So, will the surging price of iron ore help the Australian economy recover faster?

Why is the iron ore price surging?

With economic fears of the coronavirus pandemic subsiding, the iron ore spot price has surged more than 10% since the end of April and is currently trading above US$91 a tonne. The iron ore price has surged on the back of stronger than expected demand from China and weak supply from exporters in Brazil.

Earlier this year, the pandemic triggered fears as steel stockpiles in China surged due to subdued construction demand. However, as construction projects have restarted in China the country’s steel surplus has been absorbed. In addition, the potential for infrastructure stimulus has also strengthened the demand side.

In addition to stronger demand, the rapid spread of coronavirus cases in Brazil has impacted the country’s output. Brazil has long been the world biggest producer of iron ore, however a dam collapse last year resulted in tighter restrictions being placed on mines. Surging coronavirus cases in the country have also raised concerns about future iron ore supply.

How have iron ore miners performed?

Iron ore miners on the ASX have outperformed in 2020 despite the tumultuous conditions of financial markets. Fortescue Metals Group Limited (ASX: FMG) has seen its share price surge almost 30% for the year and is currently trading at all-time highs. Mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have also seen strong demand with their share prices bouncing 44% and 28%, respectively, from their lows in March.

The Australian mining sector was partially immune to the coronavirus lockdown with workers allowed to commute for work. In addition, coronavirus transmission in the iron ore producing heartland of Western Australia remains low.   

Foolish takeaway

According to the Minerals Council of Australia, iron ore exports are the largest source of export revenue in Australia, contributing $63 billion in 2017 to the economy. Iron ore producers in Australia are poised to benefit and provide a boost to the local economy as they dominate supply for recovering Chinese demand.

In addition to the economy, the ASX 200 iron ore miners could also provide value to shareholders. With companies in the banking sector slashing dividends, iron ore miners could fill the income void by matching or increasing their payouts.

More reading

• 3 ASX shares that will have strong dividends in 2020
• 5 ASX 200 dividend shares for an economic recovery
• Why ASX iron ore miners like BHP aren’t afraid of the China trade war
• Fortescue share price hits a record high: Is it too late to invest?
• ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Commonwealth Bank of Australia (ASX: CBA) share price has been a positive performer on the S&P/ASX 200 Index (ASX: XJO) on Tuesday.

In afternoon trade the banking giant’s shares are up 2% to $60.00.

Despite this decent gain, the Commonwealth Bank share price is still down a sizeable 34% from its 52-week high.

Are CBA shares in the buy zone?

I think Commonwealth Bank’s shares are in the buy zone at this level. Though, given how poor investment sentiment is in the sector, I wouldn’t necessarily be surprised if they went lower before going higher.

However, for patient investors that are not bothered by the day to day fluctuations of share prices, I believe an investment at the current level will yield strong total returns over the next three to four years.

Times certainly are tough for the bank right now, but the cycle will soon change and growth will emerge once more. I’d want to be holding its shares when that happens.

What about dividends?

I feel it is inevitable that Commonwealth Bank will have to cut its dividend again in FY 2021.

Estimating just how much of a cut is very difficult and will depend a lot on how accurate its COVID-19 provisions are. However, I would expect the bank to pay out a dividend of around $3.70 per share next year.

While this dividend would be just a touch higher than the one it paid all the way back in 2013, the pullback in its share price means it still equates to a very generous yield.

Based on its current share price, this implies a forward fully franked 6.15% dividend yield. That certainly is attractive in my eyes in this low interest rate environment.

Foolish Takeaway.

The Commonwealth Bank share price could easily go lower before it goes higher again. However, trading conditions will eventually improve and its share price will almost certainly start moving upwards when the market first anticipates this change.

In light of this, I think it could be a good idea to pick up shares with a long term and patient view today.

More reading

• 3 ASX 200 blue chip shares I would buy today
• The ASX big bank stock most likely to outperform in the COVID-19 recovery
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• Cochlear share price edges lower on patent infringement news
• 3 ASX shares to instantly diversify your portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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