I believe that the best ASX shares to buy are ones that have good growth prospects.
There’s not much point buying a business with limited growth unless you have very good visibility of its cashflow generation.
If I were investing into ASX growth shares, I’d pick these two:
A2 Milk Company Ltd (ASX: A2M)
A2 Milk is trading at 27x FY21’s estimated earnings.
A2 Milk has been one of the best businesses to come out of Australia and New Zealand. It has a great brand with an image of high quality. The company has taken a number of basics like milk & infant formula and turned them into a luxury position in the market.
The biggest reason why I think it’s a growth share to watch is the international growth. There are few ASX companies that are growing strongly in the US or China, let alone both of the major economies. A2 Milk has two large growth runways here.
Excitingly, there are plenty more products that A2 Milk can release to grow further. There are many other countries that A2 Milk doesn’t have a full presence in like it does in Australia and New Zealand.
Webjet Limited (ASX: WEB)
Webjet is trading at 16x FY21’s estimated earnings.
Webjet is another quality ASX business that’s taking on the world. Most Aussies will recognise Webjet as a leading travel business that you can find cheap flights, hotels or package deals. This is a good, attractive part of the overall business.
However, it’s the B2B side of the business that is predicted to grow the most over the coming years. Management believe WebBeds can reach an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 50%. WebBeds is also growing revenue at an impressive organic rate. When you combine these two elements you should get fast earnings growth and market-beating share price returns.
A potential takeover could put a rocket under the Webjet share price this year.
Both businesses are expected to grow at an impressive rate between FY19 and FY21, yet these two shares trade at a much cheaper earnings multiple compared to the well-known fast-growth tech shares. I’d be very happy to buy shares of both of them today, particularly Webjet.
The post 2 of the best ASX growth shares to buy for 2020 appeared first on Motley Fool Australia.
But they’re not the only growth shares worth buying today, these exciting stocks could also be worth a spot in your portfolio.
Our Motley Fool experts have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.
One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield...
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
- Man bets $221,666 on one ASX stock
- Top analysts name their top 3 ASX blue chip shares for 2019
- 3 quality dividend shares to boost your income
- NEW: Free report names top 3 ASX dividend shares to buy for 2019
- 5 Stocks for Potentially Building Wealth After 50
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020