How are these ASX Growth stocks BrainChip, A2 Milk, Zip Co, bucking the trend?

By - Team Kalkine Media


  • Growth stocks, as the name suggests, are those that are booming and burgeoning at a rabbit’s pace with their bolstered revenue growth, rapid expansion, and strategic initiatives.
  • ASX listed growth stocks like A2M experienced a bolstered revenue growth during FY20, while CAR’s robust results for FY20 exemplifies that the Company is well-funded with low gearing, boosted liquidity and robust cash generation to fund growth capital.
  • Despite BRN’s feeble performance in 1H FY20, the Company’s recent inked deals have enhanced its outlook and a positive impact projected in the long run.
  • In an update dated 1 September 2020, Zip Co concluded the acquisition of QuadPay to boost its position in the US market and further intends to launch in the UK during 1H FY21.

On 10 August 2020, the Australian benchmark index S&P/ASX 200 closed the day’s session at 5908.50, up by 0.51% as compared to previous day’s close.

Numerous entities across different industry verticals are not only functioning steadily amid COVID-19 crisis, but they are booming and burgeoning at a rabbit’s pace with their bolstered revenue growth, rapid expansion, and strategic initiatives.

The stocks of these growing companies are being eyed by investors after considering several factors, as well as scrutinisation of numerous equities for their key quality and financial indicators.

Growth stocks are garnering attention of the investors due to their investment strategies, as well as their capability to bestow boosted returns in a shorter time period, triggering capital gains for the investors.

Let's quickly discuss few ASX listed stocks that are witnessing growth during the economic turmoil.

BrainChip Holdings Ltd (ASX:BRN)

On 9 September 2020, Global AI player, BrainChip, announced its participation and exhibition of its ultra-low power, high-performance neural processor, Akidaâ„¢, at the 2020 Embedded Vision Summit Virtual Conference that would kickstart on 15 September and will go on until 25, 2020.

In an update dated 2 September 2020, BrainChip also announced its collaboration with VORAGO Technologies, with an intent to aid a Phase I NASA program for a neuromorphic processor that satisfies the essentials of spaceflight.

Also, read; An Exciting AI opportunity That Is Shaping Up Again – BRN

Furthermore, ASX-listed Small-Cap Tech Player, BrainChip unveiled its results for the six months ended 30 June 2020 (1H FY20) on 26 August 2020. BrainChip noted a plunge of 80% (y-o-y) in its revenues from continuing operations, which stood at US$13,397 million for 1H FY20. Additionally, expenses rose by 36% to US$6,212,777.

BrainChips’ operating loss for 1H FY20 was US$6,199,380, indicating a fall of 38% (y-o-y).

The a2 Milk Company Limited (ASX:A2M)

Dual listed (on both ASX and NZX) premium branded nutritional dairy entity, a2 Milk projects continued robust revenue growth assisted by continued investment in organisational and marketing capability during FY21.

During FY20, A2M reported robust growth of 32.8% (pcp) and 32.9% in revenue and EBITDA and stood at NZ$1.73 billion and NZ$549.7 million, respectively.

In the US, liquid milk revenue also noted an increment of 91.2% (pcp) and sales of China label infant nutrition doubled over NZ$337.7 million and expanded distribution to nearly 1,900 stores.

Furthermore, on the earnings guidance front, A2M anticipates EBITDA margin between 30%- 31%; capex to be NZ$50 million; inflated marketing investment; and enlarged costs related to packaging material and raw material.

Do Read; a2 Milk has one problem that most businesses don't mind having- Excess growing cash

Zip Co Limited (ASX:Z1P)

A BNPL space player, Zip Co, would be added to S&P/ASX 200 Index, effective on 21 September 2020, as notified by S&P Dow Jones Indices in September 2020 quarterly rebalance of the S&P/ASX Indices update.

On 1 September 2020, the Company announced conclusion of 100% acquisition of QuadPay, Inc. on 31 August 2020. Further, on the same day, Zip Co also issued convertible notes and warrants worth AU$200 million.

Financial Performance:

The Company reported robust business performance during FY20 and recorded full-year revenue of AU$161.0 million, noting an upsurge of 91% (y-o-y). Zip Co also witnessed substantial growth in customers and partners and achieved over 2.1 million customers and 24,500 retail partners during FY20.

Notably, the Company also intends to launch in the UK during 1H FY21.

Source: Company’s Presentation, dated 27 August 2020 Limited (ASX:CAR)

CAR, an Australia based Company having an online business related to automobile, bike and marine, divulged its bolstered financial position in its FY2020 results for the year ended 30 June 2020.

The Company witnessed a rise of 1% (y-o-y) in the adjusted revenue and stood at AU$418 million. CAR’s adjusted net profit after tax (NPAT) noted an increase of 6% (y-o-y) to AU$130 million.

CAR’s domestic and international growth is demonstrating the business strength and diversification benefits across geography, as well as product.

The Company is well funded with low gearing, boosted liquidity and robust cash generation to fund growth capital as well as dividends.

Source: Company’s Presentation, dated 19 August 2020

Stock performance of BRN, A2M, Z1Pand CAR, as on 10 September 2020.