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Growth-oriented investors choose companies with future potential and financial health. They look at profitability records based on projected and historical earnings, cash flow, and revenue growth to find stocks that bear the potential to grow steadily over time.
ASX (Australian Securities Exchange) growth stocks represent growing companies and notable players in industries listed on the Australian stock market, often steered by cutting-edge technologies and business strategies. When assessing growth stocks, it's essential to look for companies that have positioned themselves in growing markets at large, continue to outperform, and have an obvious competitive advantage. Investors also zero in on companies under strong leadership, a solid management team boasting a track record of execution and strategic vision.
Established in 1851, BHP Group is one of the leading mining firms in the world, and it produces a wide range of commodities.
BHP reported an annual revenue of US$53.8 billion at the end of the 2023 fiscal year and currently has a dividend yield of 5.7% and a debt-to-equity ratio of 44.7%. The company operates across Australia, the US, Canada, and Chile, and engages in the extraction of minerals, mainly iron ore operation—its biggest revenue generator—accounting for US$24.8 billion in the 2023 financial year-end. This positions BHP to benefit from the projected iron ore outperformance in 2024. Due to limited supply in China, iron ore stockpiles have reached multi-year lows. However, analysts anticipate this will keep prices high in the iron ore market. BHP's stock price could benefit from high iron ore prices, driven by demand and tight supply.
Xero is a popular cloud accounting software solution focused on small and medium businesses. Its key markets are Australia, New Zealand, and the UK. Over 3.95 million subscribers use Xero in over 180 countries.
Xero's reporting season is set to commence in May as it follows the New Zealand financial year. The company's revenue has grown steadily over the years. Xero's FY 2023 financial results show that its operating revenue increased by 28% to reach $1.4 billion, driving a 45% rise in adjusted EBITDA to $301.7 million compared to FY 2022. XRO's Price-To-Sales Ratio is 14.2x, indicating a better value than the peer average of 17.9x.
Xero has a solid and loyal customer base, and as subscribers continue to increase, revenue is expected to grow. With the company holding a dominant position in the market and experiencing steady growth under the leadership of newly appointed CEO Sukhinder Singh Cassidy, analysts consider Xero as a good prospect for long-term growth.
ResMed, Inc. is a prominent player in the global healthcare market in designing, manufacturing, and distributing generators, masks, and related accessories for treating sleep-disordered breathing (SDB) and other respiratory disorders.
The company is positioned for growth, supported by its cloud-connected platforms AirSense10 and AirSense11—which are in huge demand globally—and through its solid growth in SaaS business. According to ResMed's press release ('Second-quarter results of Fiscal Year 2024’), its revenue increased by 12% to $1.2 billion. SaaS revenue increased by 24%, mainly from ResMed's acquisition of MEDIFOX DAN in 2022. Apart from SaaS, revenue in the US, Canada, and Latin America grew by 9% and in Europe, Asia, and other markets by 12% on a constant currency basis. The company remains well positioned for growth with its venture into new regions and increased adaptation of the myAir app with the AirSense 11.
Growth stocks are suitable for investors looking for high returns and are comfortable navigating the volatility of the growth sectors. While there are varied ASX growth stocks, growth investors often seek stocks that match their investment objectives and risk tolerance.
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