what are best stocks to invest in Australia?
Australian Security Exchange (ASX) has observed growth in stocks in 2022. However, the both ghouls of rising inflation and increasing interest rates are making ASX difficult to achieve the economic growth. The financial stress could be attributed to geopolitical events. For instance, Ukraine war, the pandemic lockdowns have tremendously contributed to the factors that have slowed down its share price falls even of its best ASX growth stocks.
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Growth stocks are basically the shares in the companies that are expected to grow much faster than the average growth of company within the specific sector. Usually, investors hope to make profit gains in short term. Some of the best growth stocks are especially those which are occupying a specialist niche, trade at a high price earning ratio. The growth stocks could also see rapid decline in its growth if the companies underperform.
the question of most of the peoples are what are best stocks to invest in Australia
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Common traits that usually involved in the popular ASX growth stocks
are the technologies or patents that grant the company a different and unique market strategy. Fundamentally, investing comes with risk, for instance, Tesla proponent believed that EV trailblazer could be the stable leader in automobile market but if not succeeded in the same will put a huge risk to Tesla. Another example could be of biotech companies in which their valuations are reinforced by one drug or treatment and if the drug fails in the trial itself, the chances become higher for the collapse of share prices.
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Table of Contents
There are the ten most promising ASX growth stocks for investors to consider:
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Domino’s Pizza enterprises
This ASX-listed pizza operator is the largest in Australia in terms of sales and store numbers It’s also the world’s largest franchisee for the original American Domino’s Pizza brand which was founded in 1960 in Michigan.
Morgan’s analysts consider Domino’s to be a ‘high-quality operator with significant brand strength, first-class executive management and a global platform for long-term network expansion.’
Given that the headwinds faced by the operator are likely transitory, Morgans argues that ‘now is the best time to consider an investment in a quality business like DMP that is facing headwinds that will reverse in time.’
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Allkem is one of the world’s largest lithium miners, with its portfolio of projects including sites in Australia, Canada, Japan, and Argentina. The lithium miner expects production to grow threefold by 2026, which could enable it to maintain a 10% share of global lithium production over the next decade.
Alkema’s share price could see strong growth in future on the back of rising demand for lithium as the adoption of electric vehicles accelerates. Altium shares are down circa 12% over the past year to $36. The software company provides PC-based electronics design software to engineers who design printed circuit boards (PCBs). Management is so confident of its growth prospects that Altium rejected a $38.50 per share buyout bid from Autodesk in June 2021 as ‘significantly undervalued.’ And it may have a point, as it counts Tesla, Microsoft, Amazon, Alphabet, Apple, SpaceX, and even NASA among its clients.
Accordingly, in FY22, the company saw revenue rise by 23% to US$220.8 million, while net profit after tax soared by 57% to US$55.5 million.
Goldman Sachs has a $42 price target on the ASX growth stock, citing ‘strong momentum from its flagship, desktop based software, Altium Designer, while has significant monetisation opportunities’.
New Zealand-based tech company Xero develops accounting software for small businesses that leverages online and mobile technologies to improve convenience and functionality.
The company provides its more than 3.5 million subscribers with an online platform for sending invoices, performing bank reconciliation, paying bills, claiming expenses, accepting payments, tracking projects, and doing payroll.
Xero’s share price has plunged by 50% year-to-date to just above $73. Goldman Sachs nonetheless recently reiterated its buy rating with a $112.00 price target, highlighting the growth opportunity as self-employed leave traditional accountants through the recession.
GQG Partners shares comprised the largest ever Initial Public Offering launch on the ASX back in 2021, raising $1.2 billion on an initial $5.9 billion market cap. However, while the company launched at $2 a share, it is now down to just $1.38.
But with over $86 billion of assets under management, Chairman and CIO Rajiv Jain argues that ‘the reasons people entrust us with their money is that at some point in the future, they expect to get more money back.
The CIO has developed an investment approach coded ‘Forward Looking Value,’ which ignores traditional constraints in favour of investments that could prosper over longer timeframes.
Judo Capital Holdings
Judo Capital shares are down by 42% year-to-date to just $1.25 as Australia’s challenger bank is battered by the damaging recessionary environment.
However, its IPO in November last year made it the first bank to list publicly in Australia since Macquarie in the 1990s, and it fills a niche position as ‘Australia’s only challenger bank purpose-built for small and medium businesses.’
Rising interest rates could eventually create significant profitability, though concerns over a severe recession could outweigh the hoped-for benefits.
Airtasker shares are down 61% year-to-date to $0.34, as a casualty of the wider recessionary environment. Australia’s market leader for online marketplace local services, and answer to Freelancer, Upwork, and Fiverr, has a vast $600 billion total addressable market across Australia, the US, and UK.
Encouragingly, there is substantial room for growth, as it saw a gross marketplace volume of just $189.6 million in FY22, up 23.8% on FY21.
And happily, Morgans analysts have an ‘add’ rating in place, with a $0.95 long term price target on the growth stock.
Up 15% year-to-date and attempting to close in on their pre-pandemic value, Webjet shares are changing hands for circa $6 apiece. Of course, the online travel agent has been battered by pandemic era lockdowns followed by the rising cost-of-living crisis.
However, management expects the company will return to profitability in the near future. Further, the pandemic has forced it to pare down any excesses. While the process has been painful, it now leaves the ASX growth stock with margins in a healthier position for the recovery.
Goldman Sachs analysts therefore have a ‘buy’ rating for Webjet, with a price target of $6.90.
NextGen Energy shares could be a decent addition to an investor’s growth stock portfolio. The uranium miner, which is listed on multiple stock exchanges worldwide, could soon benefit from the rising desire for energy security, green solutions, and the on-off political chaos in major uranium-producing country Kazakhstan.
While the uranium spot price is off its March high, it still fetches a very respectable $6, with further rises likely as demand for nuclear energy grows.
Nitro Software shares experienced a volatile 2022, collapsing by more than 50% before recovering to end the year almost flat at $2.24 apiece.
The ASX growth stock provides e-signature tools and integrated PDF support to customers through its Nitro Productivity Suite. It has a total addressable market of US$34 billion, with e-signatures generally viewed as a growth area worldwide.
Investment firm Potentia recently made an offer of $1.58 per share to buyout the company, but management rejected the offer as ‘highly opportunistic’ given the market environment. Nitro saw revenue rise by 36% year-over-year to US$32.7 million in H1, has no debt, and could arguably be oversold.
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