How to target ASX growth stocks (and 4 ideas that stand out from the pack)

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As the father of two young boys aged under 10, Easter is a fun time in my household. It culminates with Sunday lunch but the highlight - at least in the boys' eyes - is the traditional easter egg hunt...

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It culminates with Sunday lunch but the highlight - at least in the boys' eyes - is the traditional easter egg hunt...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/how-to-target-asx-growth-stocks-and-4-ideas-that-stand-out-from-the-pack\">Source Link</a>\n\n</div>\n","source":"livewire_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>How to target ASX growth stocks (and 4 ideas that stand out from the pack)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nHow to target ASX growth stocks (and 4 ideas that stand out from the pack)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-10 10:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/how-to-target-asx-growth-stocks-and-4-ideas-that-stand-out-from-the-pack><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>As the father of two young boys aged under 10, Easter is a fun time in my household. It culminates with Sunday lunch but the highlight - at least in the boys' eyes - is the traditional easter egg hunt...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/how-to-target-asx-growth-stocks-and-4-ideas-that-stand-out-from-the-pack\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK7506","symbol_name":"金矿股","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/how-to-target-asx-growth-stocks-and-4-ideas-that-stand-out-from-the-pack","article_id":"2426045151","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/how-to-target-asx-growth-stocks-and-4-ideas-that-stand-out-from-the-pack","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2426045151","pubTimestamp":1712714417,"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"As the father of two young boys aged under 10, Easter is a fun time in my household. It culminates with Sunday lunch but the highlight - at least in the boys' eyes - is the traditional easter egg hunt, whereby my wife and I brace the typically brisk Melbourne weather at 5 am, to lay out in the garden what seems like an endless supply of eggs.My wife likes to make it easy for the boys, whereas I usually make things more challenging - under rocks, in places they can see but can't reach, etc.You might ask - \"What on earth does this have to do with growth stocks?\" Well, with markets rallying, rates potentially having peaked, and growth stocks once again all the rage, it's important to have a process to identify high-quality growth stocks - you don't want to go looking for rockets under rocks and you don't want to buy something that is only hot for a minute.","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7506":"金矿股","BK7049":"互联网与直销零售","CLG.AU":"Close The Loop Ltd","BK7007":"医疗保健设备","ROE":"ASTORIA US QUALITY KINGS ETF","BK7128":"专卖店","SCL.AU":"SCHROLE GROUP LTD","JIN.AU":"JUMBO INTERACTIVE LTD","RMS.AU":"RAMELIUS RESOURCES LTD","BK7088":"工业机械","WTC.AU":"WISETECH GLOBAL LTD","BK7503":"科技股","BK7021":"服装零售","ANG.AU":"AUSTIN ENGINEERING LTD","HLO.AU":"Helloworld Travel Ltd","WEB.AU":"WEBJET LTD","BK7142":"石油与天然气的勘探与生产","BK7077":"建筑机械与重型卡车","OEL.AU":"OTTO ENERGY LTD","VVA.AU":"VIVA LEISURE LTD","BK7104":"黄金","LBL.AU":"LASERBOND LTD","STP.AU":"Step One Clothing Ltd","SGF.AU":"SG FLEET GROUP LTD","LBT.AU":"LBT INNOVATIONS LTD","XAO.AU":"标普/澳交所 普通股指数","BK7054":"投资银行业与经纪业","CIA.AU":"CHAMPION IRON LTD","BK7099":"工业房地产投资信托","BK7050":"调查和咨询服务","XJO.AU":"标普/澳交所 200指数","BK7132":"教育服务","VEE.AU":"VEEM LTD","GMG.AU":"GOODMAN GROUP","LOV.AU":"LOVISA HOLDINGS LTD","UBI.AU":"UNIVERSAL BIOSENSORS INC-CDI","HUB.AU":"HUB24 LTD","FLT.AU":"FLIGHT CENTRE TRAVEL GROUP L","KPG.AU":"KELLY PARTNERS GROUP HOLDING","XKO.AU":"标普/澳交所 300指数","BK7146":"消闲设施","EVO.AU":"EMBARK EARLY EDUCATION LTD","TLX.AU":"TELIX PHARMACEUTICALS LTD","CDA.AU":"CODAN LTD","PME.AU":"PRO MEDICUS LTD","BK7510":"REITs概念","BK7070":"酒店、度假村与豪华游轮","RCL.AU":"READCLOUD LTD","BK7155":"工业房地产信托","BK7084":"电子设备和仪器"},"translate_title":"如何瞄准ASX成长型股票（以及脱颖而出的4个想法）","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"RCL.AU":1,"LBL.AU":1,"KPG.AU":1,"JIN.AU":1,"HUB.AU":1,"HLO.AU":1,"GMG.AU":1,"FLT.AU":1,"EVO.AU":1,"CLG.AU":1,"CIA.AU":1,"CDA.AU":1,"LBT.AU":1,"LOV.AU":1,"OEL.AU":1,"PME.AU":1,"RMS.AU":1,"ROE":1,"SCL.AU":1,"SGF.AU":1,"STP.AU":1,"TLX.AU":1,"UBI.AU":1,"VEE.AU":1,"VVA.AU":1,"WEB.AU":1,"WTC.AU":1,"ANG.AU":1,"XKO.AU":0.9,"XAO.AU":0.9,"XJO.AU":0.9},"content_text":"As the father of two young boys aged under 10, Easter is a fun time in my household. It culminates with Sunday lunch but the highlight - at least in the boys' eyes - is the traditional easter egg hunt, whereby my wife and I brace the typically brisk Melbourne weather at 5 am, to lay out in the garden what seems like an endless supply of eggs. \nMy wife likes to make it easy for the boys, whereas I usually make things more challenging - under rocks, in places they can see but can't reach, etc. \nYou might ask - \"What on earth does this have to do with growth stocks?\" Well, with markets rallying, rates potentially having peaked, and growth stocks once again all the rage, it's important to have a process to identify high-quality growth stocks - you don't want to go looking for rockets under rocks and you don't want to buy something that is only hot for a minute. \nIn that vein, I've dusted off some factors that I used when I was building portfolios and hunting for growth stocks, and also asked a couple of fund managers to chime in with their key factors, as well as some stocks that they like. \nFactor screening\nWhilst far from exhaustive, below are a couple of factors that can be important in identifying growth stocks; \n\n\nSales growth 1-year forward greater than 15% - the lynchpin of any growth company; it must have strong sales growth from one period to the next\n\nEPSg 1-year forward greater than 10% - always want to see strong earnings per share growth to complement the sales growth\n\nEBITDA margin 1-year forward greater than 10% - expanding margins are important for growth companies as they scale up\n\nROE 1-year forward greater than 10% - ROE is a quality filter, measuring how efficiently a company generates its profits\n\nFCFg latest greater than 10% - Free cash flow is super important - lack of cash flow can cripple any business, let alone one trying to grow\n\nUsing an investment analysis tool, we found 25 stocks that fit our criteria. The data is as of the end of March.\nAustin Engineering (ASX: ANG)                Codan (ASX: CDA)\nChampion Iron (ASX: CIA)                         Close the Loop (ASX: CLG)\nEmbark Early Education (ASX: EVO)       Flight Centre (ASX: FLT)\nGoodman Group (ASX: GMG)                   Helloworld (ASX: HLO)\nHub24 (ASX: HUB)                                    Jumbo Interactive (ASX: JIN)\nKelly Partners (ASX: KPG)                         Laserbond (ASX: LBL)\nLBT Innovations (ASX: LBT )                    Otto Energy (ASX: OEL)\nReal Cloud (ASX: RCL)                              Ramelius Resources (ASX: RMS)\nSchrole Group (ASX: SCL)                         SG Fleet (ASX: SGF)\nStep One Clothing (ASX: STP)                 Telix Pharmaceuticals (ASX: TLX)\nUniversal Biosensors (ASX: UBI)              Veem (ASX: VEE)\nViva Leisure (ASX: VVA)                            Webjet Limited (ASX: WEB)\nWisetech (ASX: WTC)  \nBased on the list above, we asked Jun Bei Liu from Tribeca Investment Partners and James Abela from Fidelity International the following three questions;  \n\nWhat factors do you think are most important when assessing growth stocks?\nAre there any growth stocks from the list above that you like?\nWhat is the one growth stock that you particularly like and why?\n\n\n\n\n\n\n\n\n\n\nJun Bei Liu, Tribeca Investment Partners\n\n\n\nManaged Fund\nTribeca Alpha Plus Fund\nAustralian Shares\n\n\nView\n\n\n\nWhat factors do you think are most important when assessing growth stocks?\nGrowth companies, often referred to as long-duration businesses, derive much of their current value from anticipated future earnings rather than immediate returns. When evaluating these companies, projections typically extend over a minimum of five years. The valuation criteria vary depending on the growth stage of the business.\nFor early-stage innovative growth firms, the focus lies on their potential to disrupt markets and the size of their addressable market. As these businesses mature, attention shifts towards sustained top-line growth and improved margins, often driven by economies of scale. \nMetrics such as Return on Equity (ROE) and operating margins gain significance.\nIn all growth companies, however, ongoing reinvestment in business operations is crucial for sustaining innovation and driving operational efficiencies over time. When growth appears to be driven mainly by cost-cutting measures, it often raises concerns because it could be that management is prioritising short-term gains at the expense of long-term sustainability. Ultimately, sustainable market leadership and growth are unlikely to be achieved if the core business is compromised by cost-cutting tactics.\n2. Are there any growth stocks from the list above that you like?\nGoodman Group (ASX: GMG)\nAmong the list of high-quality growth businesses, Goodman Group stands out at the top of the list. Born as an industrial property specialist here in Australia, Goodman has successfully expanded its operations globally, delivering consistent growth for investors over decades. The company has curated an impressive portfolio of capital partners and a global clientele comprising blue-chip companies, showcasing an impeccable track record of execution. Goodman has become a core investment for many seeking growth opportunities, particularly within the listed property sector.\nIn recent years, Goodman Group has also emerged as a formidable player in the data centre market, boasting an extensive pipeline projected over the next 5-10 years. \nThis expansion has garnered significant interest from both blue-chip clients and capital partners, eclipsing smaller data centres such as NextDC. We believe Goodman's foray into data centres is poised to drive double-digit earnings growth over the next decade, further solidifying its position as a key player in the industry.\n3. What is the one growth stock that you particularly like and why?\nOur core holding Pro Medicus (ASX: PME), a health software company, is our highest conviction growth company in the Australian market.  It is a leading provider of software solutions for hospitals to manage the rapidly growing diagnostic imaging data sets with the group's streaming technology offering a clear advantage over competitor offerings. \nPro Medicus’ Visage software offers near-instantaneous access to state-of-the-art diagnostic tools from virtually any location while many competitors are using legacy compress and send solutions which reduce the productivity of doctors. \nPro Medicus has also demonstrated its ability to deploy software in the cloud effectively, despite the ever-growing size of image files. Cloud deployment not only enhances security but also facilitates accessibility for health providers of all sizes by eliminating the need for expensive on-premise hardware maintenance.\nDespite an impressive customer base, Pro Medicus currently holds only a 7% market share in the US, showing significant room for expansion. Additionally, the company is diversifying its software offerings to cater to other medical departments, starting with cardiology. The recent demonstration of its new cardiology software at a conference and subsequent customer trials suggest the imminent deployment of this offering within the next few months.\nWith its established market share and cutting-edge technology, Pro Medicus is poised to emerge as a key player in the integration of AI tools to support diagnosis. \nFor investors seeking long-term prospects, Pro Medicus is a rare find in the Australian market.\n\n\n\n\n\n\n\n\n\nJames Abela, Fidelity International\n\n\n\nManaged Fund\nFidelity Future Leaders Fund\nAustralian Shares\n\n\nView\n\n\n\n1. What factors do you think are most important when assessing growth stocks?\nIt is imperative to understand that growth in investing can\nbe derived from three different sources - structural, cyclical and\ntransformational growth. These are determined using different screening tools and\nprovide investors with alternative ways to analyse holding periods and\nexpectations. \nFor this exercise, I’ll focus on structural growth - which can\nbe more rewarding to investors, offering longer holding periods and enabling investors\nto enjoy the eighth wonder of the world according to Albert Einstein -\ncompounding! “Compound interest is the eighth\nwonder of the world. He who understands it earns it ... he who doesn't ...\npays it.” \nI\ntend to use Cash Flow Return on Investment (CFROI) - one of the founding\nprinciples and processes in the Credit Suisse system known as HOLT. \nThe benefit\nof this method is that it aims to measure the efficiency of the company in its\nuse of capital and financing. \nNaturally, this favours capital-light companies,\nstructural winners, beautiful compounders and high return on capital\nopportunities. \nA\nvaluation metric I use is Price/Earnings vs Return on Equity (ROE). This\nprovides a relative measure of a company’s valuation to the ROE, compared to\nthe index. For example, in the current market, the Price/Earnings Ratio of the\nASX Mid Small Index is 18x and the ROE is 11%, a ratio of 1.6x. \nConsider\na structural growth stock with a high ROE of say 22%, which is double the\nindex, trading at a Price/Earnings Ratio of 36x. A high return on equity\nbusiness can organically grow earnings per share at a higher rate than the\nindex. \nThis higher earnings growth will allow the company to outperform the\nindex. If the return on equity is considered when looking at the valuation\nmetrics, the P/E to ROE ratio is 1.6x which is the same as the index, despite\nthe ROE being double the index. \nThis will allow an investor to see the\npotential growth and outperformance when these two ratios are viewed together \nrather than in isolation.  \n2. Are there any growth stocks from the list above that you like?\nWisetech Global (ASX: WTC)\nFounded 30 years ago, Wisetech has a unique offering in a market where only a\nhandful of players specialise, operate and innovate like Wisetech.  It is also a well-known founder-led business\nby Richard White who has dedicated his life to building the business into what\nit is today. \nUsing\nthe HOLT CFROI system growth screening metric, Wisetech generates returns in\nthe high 20% range. \nBased on this metric, Wisetech’s CFROI is more than twice\nthe average company in the Australian mid and small-cap universe. \nThis screens\nas high growth, has proven to be a structural winner, and operates in a unique,\ncomplex area of specialisation, providing software services to the logistics\nindustry which appears to have many years of growth ahead. \nAt\nfirst glance, this stock looks expensive on a Price to Earnings Ratio in the\n90x range.  However, from the\nPrice/Earnings to ROE perspective, the stock is around 3.2x (assuming a 90x PER\nand 28% CFROI), which is only double the index as noted above. The “double the\nindex” in the context of the return on capital profile, structural growth and long-duration nature of the earnings stream is more palatable than a first-glance\nlook at the Price to Earnings, which is 5x the index.   \n3. What is the one growth stock that you particularly like and why?\nLovisa (ASX: LOV) is a specialty retailer company that has carved out a niche in low-price point\njewellery that is: \n\nselling an on-trend product that is well-researched by following social media trends \n\noffers a low-cost, small store footprint \nhigh inventory turnover \nhigh gross margin product range \nresulting in a high return on\ncapital business. \n\nThere\nis structural growth for this business over the next three years, as the store\nnetwork continues to grow around the world. Operating discipline is generating\nstrong cash flows which can be reinvested into the store network. A strategic\nfocus on following social media, fashion trends, influencers, novelty items and\non-trend product that is offered to customers at an affordable price point has\nbeen a winning business position in a competitive marketplace.\nFinancially,\nthe return profile is very strong with recent returns on capital near the 90%\nlevel, which is nearly 10x the average Australian mid and small cap universe. \nCurrently the company is trading on a Price to Earnings ratio of 36x, which is\ndouble the index universe, but given the growth and return profile, this\ncontinues to look attractive.     \nOver to you\nWhat's your favourite growth stocks right now and why?\nFeel free to share in the comments section below, as well as any particular criteria you like to consider when hunting for growth opportunities.\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2426045151"}