- A few growth stocks like Amazon, Google, Microsoft, Tesla, etc have consistently been providing the investors with high yields.
- Pushpay Holdings delivered an exponential return of 24 per cent on YTD basis (as on 26 May 2020).
- Nanosonics plans to reduce non-essential items’ operating costs while maintaining its underlying strategy.
- Domino’s will open new stores in the next financial year, depending on the regional market conditions.
Businesses around the globe are grappling with the rising threat of COVID-19 pandemic. With passage of time, the detrimental effects of coronavirus seem to be giving mixed results for the stock markets across the world. On 26 May 2020, S&P/ASX 200 Index ended the day’s trade by 164.4 points or 2.93 per cent higher at 5780. On 27 May 2020, the same index declined by 0.09 from its last close and was at 5775 points.
Growth stocks seem to be favourite for some investors as per their investment strategies. Rather than delivering dividends, growth stocks are known for generating capital gains for investors. Thus, growth stocks usually incur a high revenue, positive cash flow, solid gross margins, and high price to earnings and price to book ratios. A few examples of global growth stocks are Amazon, Google, Dropbox, Microsoft, Netflix, Salesforce, Spotify and Tesla.
In this article, we are highlighting 5 ASX listed growth stocks, with planned outlook and strong fundamentals. The stocks under the radar are – ALU, NAN, PPH, DMP, FXL-
Altium Limited (ASX:ALU)
Information technology company, Altium focuses on embedded system development and electronics design systems for 3D PCB design. ALU was established in the year 1985 and is based in San Diego (California).
ALU entered the period of coronavirus with solid results from half-year (released in mid-February) for the period ended 31 December 2019. Altium reported growth in revenue of 27 per cent in China, along with an increase of 25 per cent in its interim dividend and 16 per cent rise in the subscription base, on pcp basis.
Despite the increasingly challenging environment, the Company is striving to attain the target of 100,000 subscribers by 2025. It is likely to reach 50,000 subscribers for the present year after seeing a solid performance in its renewal business.
In a recent update, released on 12 May 2020, ALU’s CFO, Mr Joe Bedewi, mentioned that Altium is financially strong with a cash balance of more than USD 77 million. The Company assured that overall, it has a robust pipeline for the remaining period of fourth quarter.
By the end of trading session, on 27 May 2020, ALU was at AUD 36.73 per share, demonstrated a fall of 1.131 per cent against previous close. The market capitalisation of ALU was recorded at AUD 4.87 billion. Altium has provided shareholders with a positive return of 11.86 per cent and 8.18 per cent within the time span of one month and YTD, respectively.
Nanosonics Limited (ASX:NAN)
Health care provider, Nanosonics delivers infection control solutions and manufactures trophon® EPR ultrasound probe disinfector.
NAN had minor debt and strong balance sheet with cash reserves of AUD 82 million as noted on 31 December last year. Further, the Company mentioned that consumables sales till the end of Q3 FY 2020 ended 31 March 2020 was in line with its pre-COVID-19 expectations. Due to growing awareness regarding the importance of ultrasound probe decontamination, the unaudited sales increased significantly on pcp basis.
To maintain robust results for FY 2020 fourth quarter, the Company is undertaking measures to reduce the operating costs of its non-essential items, without having any impact on underlying strategy of NAN.
At the close of trading session on 27 May 2020, stock of NAN settled at AUD 6.97 per share, indicating a fall of 3.329 per cent against its previous closing price. NAN’s market cap was at AUD 2.17 billion. Nanosonics has provided shareholders with a positive return of 10.24 per cent and 13.36 per cent within the time span of one month and YTD, respectively.
Pushpay Holdings Limited (ASX:PPH)
Information Technology company, Pushpay offers a donor management system. Its leading solutions make payments and administration simple that allow the consumers to boost their involvement and create solid associations with their respective communities.
The Company took advantage of a clear shift strategy towards digital for the customers to use its mobile first technology solutions. Due to COVID-19, PPH’s total processing volume for March was higher than its expectation.
The Company delivered strong results and achieved its guidance for FY 2020 for period ended 31 March 2020. Key highlights of the performance (compared to pcp) are as follows:
- Revenue from continuing operations increased by 32 per cent, from USD 98.4 million to USD 129.8 million.
- Profit before tax stood at USD 21.7 million, an upsurge of 1,631 per cent from a loss of USD 1.4 million.
- Gross profit increased by 43 per cent, from USD 58 million to USD 82. 7 million.
- Total customers increased by 42 per cent, from 7,649 to 10,896 customers.
- Operating cash flow increased by 953 per cent, from USD 2.8 million to USD 23.5 million.
- Net tangible assets per Quoted Equity Security was USD 0.1967 cents as the borrowings were utilised towards the payment for the acquisition of Church Community Builder.
At the close of trading session on 27 May 2020, stock of PPH settled at AUD 6.74 per share, indicating a rise of 4.496 per cent against its previous closing price. PPH’s market cap was noted at AUD 1.78 billion. Pushpay has provided shareholders with a positive return of 62.06 per cent and 66.24 per cent within the time span of one month and YTD, respectively.
Domino's Pizza Enterprises Limited (ASX:DMP)
Consumer Discretionary company, Domino's Pizza connects people with fresher, faster, and quality food. The Company has a franchise in Australia, Belgium, Denmark, France, Germany, Japan, Luxembourg and the Netherlands, and New Zealand.
For franchisees, team members, and the community, Domino’s had executed substantial safety, support, and charitable initiatives.
On the financial front, DMP had cash of USD 260 million as at 27 March 2020 with no committed short-term debt. Also, Domino’s has zero committed short-term debt along with committed debt facilities, which is due for renewal in H1 FY 2023 period. Domino’s did not change its outlook for sales from same store (+3 to 6 per cent / year), new store openings (+7 to 9 per cent / year) and Net Capex (USD 60 - 100 million / year).
DMP mentioned that COVID-19 brings uncertainty for short-term period for some franchisees as there is an interruption in launching of stores that were scheduled for FY 2020. Depending on the local market conditions, the Company would open new stores in FY 2021.
On 27 May 2020, DMP was at AUD 62.71 per share, reflecting a growth of 1.243 per cent against its last close. The market capitalisation of DMP was recorded at AUD 5.34 billion. Domino has provided shareholders with a positive return of 21.86 per cent and 14.96 per cent within the time span of one month and YTD, respectively.
FlexiGroup Limited (ASX: FXL)
Financial provider, FlexiGroup offers a wide range of finance solutions including Buy Now Pay Later products, business and consumer leasing, and credit cards. This diverse nature of the business allows the Company to be resilient in the prevailing environment condition.
FXL has more than 30 years of experience in terms of operating in Australia. The Company serves over 1.8 million customers across Australia, Ireland, and New Zealand. FlexiGroup has partnerships with 71,000 sellers.
The Company maintains a long track record of producing strong performance results while passing through the uncertain economic time.
As at 31 March 2020, FXL had more than AUD 550 million and AUD 100 million in undrawn committed wholesale funding facilities and corporate debt facilities, respectively. At the close of 3Q20 ended 31 March 2020, the Company recorded the following accounts (on pcp basis):
- Active customers increased by 11 per cent, to 1.89 million.
- Receivables rose by 5 per cent, to stand at AUD 2.77 billion.
- Merchant partners increased by 12 per cent, to 71,000.
Also, FlexiGroup anticipates surpassing the target of AUD 7 million in cost savings in FY 2020.
On 27 May 2020, FXL settled at AUD 1.20 per share, signifying a rise of 5.263 per cent against its last close. The market capitalisation of FXL was noted at AUD 449.61 million. FlexiGroup has provided shareholders with a positive return of 59.44 per cent within the time span of one month.