ASX Growth Stocks with increasing revenue track record

Summary

Growth stocks are shares of those companies whose revenue growth and share price appreciation are higher than that of the market average.

Investing in growth stocks involves higher than average market risks, representing a trade-off for strong capital gains.

Several factors should be taken into account while selecting the growth stocks.

It is hardly surprising to see many swearing off the life mantra of carpe diem, especially when those hedonistic consumption and fat taxes are chipping away at people’s hard-earned bucks. As a result, the present-day investor does not underestimate the power of saving and deploys the same in right growth stocks, which goes a long way in ensuring financial freedom.

However, some resolutions are easier made than put into practice! After all, we live in the modern world where credits and shopping are just a click away and are constantly challenging the penny-pinching efforts.

In the contemporary struggle to get the best of both worlds, growth investing has emerged as a potent vehicle to ensure wealth aspiration while not compromising our lifestyles.

What are Growth Stocks?

Growth Stocks represent shares of those companies that have commanded more robust revenue growth and share price appreciation than the market average. Most of these growth stocks do not pay dividends, with their earnings reinvested to boost the company’s growth. Nevertheless, investors are exposed to lucrative wealth appreciation opportunities through capital gains made when such businesses deliver over long periods of time.

While growth investing may look all peaches and cream, investors can find themselves in a tough spot when they fail to do all the necessary due diligence. Investing in growth stocks involves higher-than-average market risks, which can be seen as a trade-off for strong capital gains.

Thus, when cherry-picking the growth stocks for the portfolio investment, one should prudently consider a range of factors and look for diversified ideas, which could be critical towards achieving financial improvement.

Essential factors to consider when evaluating a growth stock:

Presence of large and growing markets for the company’s offerings

R&D initiatives and marketing spend for future growth prospects

Effective management skills and long-term track record

The competitive advantage and profit-maximising ability of the company in question

Information transparency and business ethics

Top Growth Stocks on ASX

Global liquidity is running high, thanks to central banks printing loads of money. The cost of capital has been low for many years now. In such a scenario many businesses have been on ahigh growth path, with investors eyeing potential capital gains through growth investing. So let us look at some growth stocks grabbing the market attention.

Pendal Group Limited (ASX: PDL)

Pendal is a global investment management business committed to offering active management of funds to its clients. Its multi-boutique style business offers extensive investment strategies across a global marketplace.

The company tabled robust half-year result for FY21, compared to the previous corresponding period (NYSE:PCP).

Here are the highlights of half-year results:

Fee revenue up by 14% to AU$277 million

Statutory Net Profit After Tax (NPAT) was AU$89.9 million, up by 64%

Underlying Profit After Tax (UPAT) up by 8% to AU$82.6 million, impacted by higher operating expenses

The significant increase in performance fees, discernible turnaround inflows across several channels, and higher global equity markets have driven strong performance. The acquisition of US fund manager Thompson, Siegel & Walmsley has positioned the company well to expedite its growth in the US, delivering it the opportunity to generate new Funds Under Management.

Incitec Pivot Ltd (ASX: IPL)

Incitec Pivot is a global manufacturer as well as marketer of commercial explosives and fertilisers. It has origins in North America and Europe in the 19th century and Australia in the early 20th century.

IPL confirmed the recommencement of the Louisiana-based Waggaman ammonia plant, which reached its full production by the start of June 2021, with the production continuing effectively.

The company indicated the completion of all FY21 planned turnarounds while the Moranbah ammonium nitrate plant in Queensland is running efficiently. Despite the impact of unplanned outages and planned manufacturing turnarounds impacting 1H FY21, the company witnessed solid customer-facing business performance driven by technology growth in explosives and delivery of the Response Plan.

The company has highlighted significant potential upside in Earnings through 2023 on the back of:

Successful diversification to cater to the resilient end markets

Targeting technology-driven earnings growth of 10% by FY22

Manufacturing Excellence

Fertiliser Recovery and Leveraging Distribution footprint & commodity price recovery

REA Group Limited (ASX: REA)

REA Group is a property-focused digital business that operates property websites in Australia, , and other real estatesites and apps internationally.

The revenue of the Group has shot up41% from A$579.1 million in FY16 to A$820 million in FY20. While the challenging market conditions resulting from the COVID-19 outbreak impacted the company’s EBITDA and profit last year, Australia’s improving residential property market is proving to be a significant tailwind.

The Group’s realestate.com.au website became Australia’s number 1 property site & app, with 3.2 times more visits than its nearest competitor.

The company has international investments across large and growing markets. The Group is also pursuing long-term growth opportunities on the back of its operational discipline aimed at building a next-generation marketplace.

Harvey Norman Holdings Limited (ASX: HVN)

The principal activities of Harvey Normal Holdings comprisean integrated retail, property, franchise, and digital enterprise.

The company reported significant results for the first half of FY21, marked by the following:

Reported profit before tax (NYSE:PBT) up by ~114% from 1H20 to A$643.91 million

Aggregated headline franchisee sales revenue up by over 27% from 1H20 to A$3.76 billion

These solid results validate the resilience of the Company’s integrated retail, property, franchise, and digital strategy.

Syrah Resources Limited (ASX: SYR)

Syrah Resources is an industrial minerals and technology company. It’s flagship Balama Graphite Operation is stationed in Mozambique. The company also has a downstream Battery Anode Material Project in the US. Syrah is working on adding value to the battery and industrial markets.

Last year, the company focused on ensuring Balama’s adaptability to market conditions while advancing its US-based downstream anode business. Moreover, EV sales have improved substantially, tracking well above recent years. Therefore, it could prove to be a significant demand driver for the anode and natural graphite markets.

The company installed and commissioned a commercial-scale furnace. Following this, it achieved the first fully integrated production of Active Anode Material (AAM) at its US-based AAM Project. The development backs the company’s objective to become a large-scale, vertically integrated producer of natural graphite AAM.

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