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- Growth stocks are the stocks that grow at a faster pace than their peers.
- These stocks delivered strong returns to shareholders in the past two years, despite challenges due to the COVID-19 pandemic.
- However, investors should be cautious of the fact that these stocks generally distribute lower dividends than others.
Growth stocks refer to stocks of those companies that are likely to grow sales and earnings at a faster rate than the market average. These stocks remain in high demand among investors due to their high growth potential. Despite the challenges due to the COVID-19 pandemic, growth stocks managed to give decent returns to their shareholders in the past two years. Investors would expect ASX-listed growth stocks to continue their strong performance in 2022 as well.
(However, investors should be cautious of the fact that these stocks generally distribute lower dividends than others.)
On this note, we discuss three ASX-listed growth shares that are well placed for a rise in 2022:
Bigtincan Holdings Ltd (ASX:BTH)
Bigtincan Holdings provides software solutions as a service (SaaS) to global organisations across the life sciences, telecommunications, financial, technology, retail, manufacturing, energy, and government sectors. The stock has given a negative year-to-date (YTD) return of nearly 14%. In the past year, the stock fell nearly 9%.
In FY2021, the growth stock saw a 48% rise in annualised recurring revenue (ARR) to AU$53.1 million. The company also recently announced the acquisition of US-based Brainshark. The company’s management expects the acquisition to boost combined annual recurring revenue (ARR) to AU$119 million in FY2022, implying a 124% year-on-year rise.
IDP Education Ltd (ASX:IEL)
IDP Education is an international student placement services firm that offers the placement of international students into educational institutions in the US, Australia, Canada, the UK, and New Zealand. The stock has given a negative year-to-date (YTD) return of nearly 10%. In the past year, the stock rose over 57%.
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The company’s future remains bright despite last two years facing challenges due to the COVID-19 pandemic. The company has emerged as a leading player in the fast-growing market. IDP’s position strengthened only after a key acquisition in the lucrative Indian market.
Xero Ltd (ASX:XRO)
Xero is a New Zealand-based public software company that offers cloud-based accounting software services and connects small- and medium-sized businesses to their advisors. The stock has given a negative year-to-date (YTD) return of over 19%. In the past year, the stock fell over 15%.
The company reported strong growth in past few years and its management expects the trend to continue in FY2022. Xero reported a subscriber rise of 23% to 3 million in the first half of the year.
It also saw a 61% rise in total subscriber lifetime value (LTV) to NZ$9.9 billion, and a 29% climb in annualised monthly recurring revenue (AMRR) to NZ$1,132 million. The company’s subscriber count is still well short of its total addressable market of 45 million subscribers across the world.
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