Growth stocks are attractive to investors wanting maximum returns in today’s financial world.

Many ASX shares offer excellent opportunities, and smart investors are looking for shares with strong capital growth potential.

As we approach FY25, here are three growth-focused ASX shares that I think are worth considering for the upcoming financial year.

PWR Holdings Ltd (ASX: PWH)

First up is cooling solutions provider PWR Holdings. The company designs and manufactures high-performance cooling solutions for automotive, motorsport, and industrial applications.

PWR serves top-tier global clients, including Formula 1 teams and major automotive manufacturers.

The retail stock reported an excellent set of numbers in its 1H FY24 results, with its revenue rising 22.2% to $64.2 billion and EBITDA up 27.2% to $18.4 billion. Strong growth in the aerospace and defence segment, up 124% from a year ago, continued to support its business, while motorsport revenue delivered a robust 19% growth.

This positive development led the PWR Holdings share price to hit its all-time high of $12.98 in February. However, since then, the share price has dropped about 14% to $11.00 at the time of writing.

At the current share price, PWR shares are trading at 35x FY25 earnings estimates by S&P Capital IQ, mid-point of its trading history of between 20x to 52x. While this is not exactly cheap, I tend to agree with my colleague Tony that the high-quality shares are rarely cheap.

VEEM Ltd (ASX: VEE)

My next pick is ASX small-cap share VEEM, which makes advanced marine technology and engineering parts. The company is well-known for its high-quality gyro stabilisers (gyros), propellers, and other precision parts used in the marine, defence, and aerospace industries.

VEEM is a small ASX company, but it has a presence in the global market and two exciting growth opportunities ahead of it.

VEEM gyros are an innovative product that replaces traditional propeller-based stabilisation. The company has the dominant position in this interesting niche.

In 1H FY24, its gyro sales were $5 million, with orders in hand of $9.2 million. While this may still look small compared to its total revenue of $37.5 million, the company sees a total addressable market of US$1.1 billion from this product. So, it’s a long runway for growth.

The company is collaborating with another industry leader, Sharrow Engineering, to adapt Sharrow’s design to a wider range of vessels. In this exclusive agreement, VEEM would manufacture and sell Sharrow-designed propellers worldwide for inboard-powered vessels. In April 2024, VEEM saw a positive outcome from initial testing and hopes to launch this product line throughout FY25.

The VEEM share price has more than quadrupled over the past year, after hitting an all-time low of 40 cents in July 2023. VEEM shares are trading at 30x FY25 earnings estimates, based on S&P Capital IQ.

DUG Technology Ltd (ASX: DUG)

The last share to discuss is DUG Technology. The company provides high-performance computing solutions, software, and data analytics services. It specialises in innovative cloud-based services, and high-performance computing (HPC). DUG is a global business with offices in Australia, Asia, Americas and Europe.

This ASX small cap share also provides an artificial intelligence (AI) angle.

In June, the Perennial Natural Resources Trust manager Sam Berridge said DUG could offer direct exposure to the AI boom, as my colleague James summarised. He highlighted DUG’s patented immersion cooling technology, which the company claims provides 90% savings in electricity use and manpower.

In 3Q FY24, the company delivered a 39% growth in revenue to US$17.6 million and a 24% growth in EBITDA to US$4.6 million. In response to strong demand, the company is planning to establish a new business unit in the Middle East.

The DUG share price more than doubled over the past year and is at a price-to-earnings ratio of 38x using FY25 estimates by S&P Capital IQ.

The post 3 of the best growth-focused ASX shares to buy in June appeared first on The Motley Fool Australia.

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Motley Fool contributor Kate Lee has positions in Veem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Dug Technology, PWR Holdings, and Veem. The Motley Fool Australia has positions in and has recommended PWR Holdings. The Motley Fool Australia has recommended Dug Technology and Veem. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Qantas Airways Ltd (ASX: QAN) shares are in the green today.

Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed yesterday trading for $6.15. In morning trade on Thursday, shares are swapping hands for $6.16 apiece, up 0.2%.

For some context, the ASX 200 is down 0.03% at this same time.

That’s this morning’s price action for you.

Now here’s how artificial intelligence (AI) can help streamline the company’s costs and services and potentially throw up some ongoing tailwinds for Qantas shares.

Qantas shares bringing artificial intelligence into the skies

If it seems like everywhere you turn AI is cropping up, you’re not alone.

And the skies are no exception.

Though still in its nascent stages, AI is already helping companies improve efficiency, provide better client services and cut costs. And the technology could offer a sustainable boost to Qantas shares.

One area where AI could help the ASX 200 airline drive down costs is maintenance.

Amazon chief technology officer Werner Vogels said the revolutionary new tech could help aeroplane mechanics identify parts that may be close to failing so they can be repaired or replaced.

According to Vogels (quoted by The Australian):

The detection part is crucial for airlines with limited options for maintenance because it means they can bring the aircraft to the place where it can undergo maintenance ahead of time.

There’s huge cost savings to be had in that.

AI has already been helping the performance of Qantas shares by reducing fuel requirements.

In 2018, the ASX 200 airline began using the technology to adjust aircraft’s flight paths in accordance with weather, the particular plane’s capabilities and its fuel supply. AI is estimated to have cut some 2% of Qantas annual jet fuel costs. And with fuel costs in the range of $5 billion a year, that’s no chump change.

Qantas also used AI to help monitor global airspace for potential closures, other aircraft, or potential dangers like volcanic ash.

Why shareholders are eyeing Joyce’s new bonus

In other news, not all Qantas shareholders are pleased that former CEO Alan Joyce is poised to receive another $16 million (or more) payout from the ASX 200 airline.

While that payment is under review, shareholder sentiment is unlikely to influence the outcome.

“‘How much is too much?’ is the wrong question to ask,” Sandon Capital managing director Gabriel Radzyminski said (quoted by The Australian).

Radzyminski added:

Ultimately, it is a question for the board, who in turn are answerable to their shareholders. Boards need to think very carefully about what contractual obligations they enter into when negotiating with CEOs and executives.

Qantas shares are up 15% in 2024.

The post How AI can help Qantas shares fly higher appeared first on The Motley Fool Australia.

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• Could Qantas shares be poised to catch some Chinese tailwinds?
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• These ASX shares could rise 25% to ~50%
• Why are ASX investors so excited by the Qantas share price?

Motley Fool contributor Bernd Struben 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.

The S&P/ASX 200 Index (ASX: XJO) mining shares face an uncertain outlook in FY25, with potentially significant elements impacting the demand side of the commodity equation.

There are a few key businesses and commodities within the ASX 200, so those are the areas I’ll focus on in this article. ASX iron ore shares make up the largest commodity exposure within the index, including BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Fortescue Ltd (ASX: FMG).

Copper and gold miners, including BHP, Rio Tinto, Sandfire Resources Ltd (ASX: SFR), Newmont Corporation CDI (ASX: NEM), Northern Star Resources Ltd (ASX: NST), and Evolution Mining Ltd (ASX: EVN), also hold a sizeable position in the ASX 200 right now.

While there may be uncertainty, there is also some positivity for each major commodity. Let’s start with iron ore.

Iron ore

This may be the most important commodity for Australia and the ASX because of how much value it can add to the country’s (and households’) finances when iron ore prices are good.

The iron ore price is currently at around US$107 per tonne, which is high enough to enable the ASX 200 mining shares to achieve satisfactory profit margins and generate healthy profits in FY25.

However, the price of iron ore has dropped from above US$140 since the beginning of 2024. Can it improve in FY25?

China is usually the key iron ore buyer, but Trading Economics points out that recent data from the Asian superpower is adding to pessimism. House prices in China declined 3.9% year over year in May, the biggest decline since 2015. There has also been “muted industrial output”, which “dampened expectations that higher manufacturing growth would drive infrastructure-stemmed steel demand to offset the rout in construction.”

Currently, the Chinese government is focused on rolling out measures to address the growing level of housing inventory rather than supporting distressed property developers (who are big users of steel and, therefore, iron ore).

Despite that, Trading Economics’ macroeconomic models and analyst expectations suggest the iron ore price could recover to approximately US$126 per tonne in a year from now. If that happened, I imagine investors could be more optimistic about the profit-making potential of the ASX 200 iron ore shares like BHP, Fortescue and Rio Tinto, as it would represent a rise of more than 17% for the commodity price.

Copper

Analysts have become more optimistic about copper as demand increases in some countries worldwide, though the weak demand in China is offsetting some of that positivity.

Macquarie recently increased its copper price forecast for the 2024 calendar year by 7% to US$9,671 per tonne and for the 2025 calendar year by 9% to US$9,575 per tonne. FY25 is made up of the last six months of the 2024 calendar year and the first six months of the 2025 calendar year.

According to Trading Economics, the copper price has fallen more than 10% in recent weeks, though it’s still up more than 10% since March 2024.

Trading Economics notes that industrial output in China slowed more than expected in May, heightening concerns that demand will not recover for the world’s biggest copper user. Chinese copper inventory is close to a four-year high.

However, with the copper price higher than it was 12 months ago, the ASX’s copper miners may be able to generate stronger mining profits if the commodity price stabilises.

Gold

The gold price has risen more than 15% in 2024 to date, to around US$2,330 per ounce.

ASX 200 gold mining shares and the gold price are two different things, but this higher commodity price can help them generate stronger profits if they can execute operationally during FY25.

Inflation and global uncertainty have helped push up the gold price. Gold is seen as a defensive hedge against risk and volatility.

According to Trading Economics, some central banks plan to increase their gold reserves “within a year due to economic and political uncertainty, despite high prices, according to the World Gold Council’s survey.”

The post What’s the outlook for ASX 200 mining shares in FY25? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Treasury Wine Estates Ltd (ASX: TWE) share price is under pressure on Thursday morning.

At the time of writing, the wine giant’s shares are down 2% to $12.17.

Why is the Treasury Wine share price falling?

Investors have been selling the company’s shares this morning in response to the release of an update on its outlook for the Penfolds business.

According to the release, Penfolds earnings before interest, tax, self-generating and re-generating assets (EBITS) is expected to be in the range of $418 million to $421 million in FY 2024. This is being driven by strong top-line growth across all portfolio tiers and price points, with the weighting of Bin & Icon portfolio shipments to the second-half completed as planned.

Penfolds EBITS margin in FY 2024 is expected to be approximately 42%. This reflects the reestablishment of entry-level Australian COO Luxury tiers and higher onshore overhead costs in China through the fourth quarter following the removal of tariffs.

Management continues to expect mid-high single digit group EBITS growth in FY 2024, excluding the EBITS contribution from the recently acquired DAOU business.

FY 2025, FY 2026, and FY 2027 Penfolds outlook

In response to the removal of tariffs in China, Treasury Wine has provided investors with an idea of what to expect from its key Penfolds business in the coming years.

In FY 2025, it expects the Penfolds business to deliver low double-digit EBITS growth. This reflects top-line growth driven by price increases and a modest increase in shipments for the Bin & Icon portfolio. This will be partly offset by a step-up in brand building investment and overheads in China of approximately $20 million ahead of increased Bin & Icon portfolio availability from FY 2026. The Penfolds EBITS margin is expected to improve to within the range of 43% to 45% for the year.

Moving on, in both FY 2026 and FY 2027, the Penfolds business will be targeting annual EBITS growth of approximately 15% across both years. This is expected to be driven by a significant increase in availability for the Bin & Icon portfolio from the record 2024 Australian vintage intake.

Penfolds will also be targeting an EBITS margin in line with its long-term target of 45%.

Broker reaction

Goldman Sachs was pleased with the update and notes that these targets are above its own estimates. However, it does concede that there are a few doubts about achieving these numbers. It said:

Whilst we view this guidance as positive and agree that China as a market continues to have attractive TAM for luxury Win/Spirits consumption, our key questions on the call will be largely focused on execution, including the structure of its on-the-ground sales team, go-to-market/distribution, channel profitability/trade marketing support, advertising focus, parallel market control and allocation between the different Penfolds regions.

The Treasury Wine share price remains up 14% in 2024.

The post Treasury Wine share price tumbles on Penfolds China update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Mineral Resources Ltd (ASX: MIN) shares are edging lower on Thursday morning.

At the time of writing, the mining and mining services company’s shares are down 1% to $60.00.

Why are Mineral Resources shares falling?

Investors have been selling the company’s shares today in response to the release of a big announcement after the market close on Wednesday.

According to the release, Mineral Resources has completed a comprehensive assessment of the viability of the Yilgarn Hub iron ore operation.

Management notes that having carefully considered all options, the assessment confirmed that the continuity of the Yilgarn Hub is not financially viable beyond the end of 2024. As a result, it has made the decision to cease Yilgarn Hub iron ore shipments by 31 December.

Mineral Resources points out that the decision has been influenced by a combination of factors. This includes the limited remaining mine life across five operating mines that are spread over 220 kilometres, and the significant capital cost and lead time required to develop new resources to ensure continuity of supply.

What’s next?

The company intends to safely ramp down the Yilgarn Hub operations in a staged approach over the next six months. This is expected to see up to four million wet metric tonnes shipped by the end of the calendar year.

Mining operations will then transition into care and maintenance from early 2025.

And while approximately 1,000 employees will be impacted by this change, Mineral Resources notes that it will work with them on redeployment opportunities across other operations. It has almost 800 vacancies across the business, with many more to open in coming months. This includes through the ramp up of the Onslow Iron project.

Mineral Resources’ managing director, Chris Ellison, commented:

This prudent but difficult decision was not taken lightly and follows years of investment to extend the life of our operations in the Yilgarn. MinRes has operated in the region since our maiden shipment from Carina in 2011. In 2018, with the support of the WA Government, we stepped in to save hundreds of Western Australian jobs at Koolyanobbing that were set to be lost with the departure of Cliffs.

By the end of this year, we will have operated Koolyanobbing for six and a half years, exported almost 45 million tonnes via the Port of Esperance and spent $4.2 billion running our Yilgarn operation, exceeding our commitments. I want to thank everyone whose hard work and dedication over the past 13 years made this challenging operation a great success.

Mineral Resources shares are down 19% over the last 12 months.

The post Mineral Resources shares fall on big iron ore news appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.

The Botanix Pharmaceuticals Ltd (ASX: BOT) share price will be one to watch closely this week.

That’s because the clinical dermatology company has just announced some very big news..

Why is the Botanix Pharmaceuticals share price on watch?

This morning, the company released a highly anticipated announcement relating to its Sofdra product.

According to the release, the US Food and Drug Administration (FDA) has approved Sofdra as a prescription medicine used to treat primary axillary hyperhidrosis (excessive underarm sweating) in adults and children 9 years and older.

This FDA approval was supported by results from two pivotal Phase 3 studies evaluating its efficacy and safety in 701 patients with the condition.

Management notes that this makes it the first and only new chemical entity approved by the FDA to treat primary axillary hyperhidrosis and presents a novel safe and effective solution for patients who have lacked treatment options for this socially challenging medical condition.

There is a larger addressable market for this than you might think. Botanix highlights that there are approximately 10 million people in the United States with primary axillary hyperhidrosis, with few effective treatments available for patients.

What now?

Management advised that it plans to launch its patient experience program in the first quarter of 2024. After which, it is anticipating its first revenue from Sofdra early in the fourth quarter of the year.

Botanix’s chief executive officer, Dr Howie McKibbon, was very pleased with the news and described it as a “transformative event” for the company. He commented:

We are pleased to share this accomplishment with our dedicated Botanix team and dermatologist partners, patients who participated in the clinical studies and our shareholders who made this approval possible. This is a transformative event for Botanix as we transition from a development stage to a revenue generating dermatology company.

This sentiment was echoed by the company’s executive chairman, Vince Ippolito. He said:

We are very excited to provide a new option for the 10 million patients with primary axillary hyperhidrosis in the United States. As the first and only new chemical entity, Sofdra represents a new therapeutic approach for dermatologists to treat patients with this disabling medical condition.

Capital raising

The Botanix Pharmaceuticals share price will remain in its trading halt despite the release of this announcement.

This is because it is looking to leverage this good news to raise capital from investors. It said:

The Company will remain in halt pending an announcement of the results of a potential capital raising, which is expected no later than opening of trading on Friday, 21 June 2024.

The Botanix Pharmaceuticals share price is up 204% in 12 months.

The post Botanix Pharmaceuticals share price on watch amid FDA news and ‘transformative event’ appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.

The iShares S&P 500 ETF (ASX: IVV) has been a very strong performer over the past year, rising close to 30%. That’s much better than the S&P/ASX 200 Index (ASX: XJO), which has only risen by 6%.

As the disclaimer usually says – past performance can’t be relied upon for future performance. So I probably wouldn’t expect the next 12 months to be as good as that, but can the exchange-traded fund (ETF) keep rising over the longer term?

Businesses can keep growing profit

The performance of an ETF is decided by the underlying investment returns of the holdings.

It’s impossible to predict the investment returns of every business within the IVV ETF, particularly in the short term.

However, the market tends to reward businesses that grow their profit over time. When profit compounds, it can grow into a much bigger profit number after three or five years.

A lot of the US share market’s returns have been driven by the major players of Nvidia, Microsoft, Apple, Alphabet, Amazon and Meta Platforms. Each of them is growing earnings, with exposure to themes like AI, cloud computing, online video, global digitalisation and e-commerce.

As a whole, the businesses within the IVV ETF could keep growing their underlying value as the US and other developed economies experience population growth, and those companies introduce new products and services.

When we look at the chart below, we can see the effect of historical profit growth on long-term returns, with some regular volatility along the way.

Is the IVV ETF too expensive?

The fund provider Blackrock regularly tells investors what the investor metrics of the ETF are.

At the end of May 2024, the IVV ETF had a price/earnings (P/E) ratio of around 26 and a price-to-book ratio of 4.5 times. These numbers seem historically high, but I don’t think it’s too useful to compare to other decades because the composition of the S&P 500 has changed.

Technology businesses usually trade on a higher P/E ratio because their operations don’t require huge balance sheets, and the market is pricing in stronger-than-average long-term earnings growth.

On top of that, US interest rates are likely to start coming down eventually – even if it’s taking longer than expected. Lower rates could help justify a higher price for those companies’ earnings.

The one speed bump I can see in FY25 is the uncertainty of the US election. Depending on what happens, there could be a fair bit of volatility. However, the last several decades have shown that the share market can keep performing no matter who is in the White House, so I wouldn’t say one person winning necessarily changes anything for the long term.

The post Can the iShares S&P 500 ETF (IVV) continue its strong run in FY25? appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.