The S&P/ASX 200 (INDEXASX:XJO) and ALL ORDINARIES (INDEXASX: XAO) are near record highs but there are still plenty of growth names out there that could go a lot higher.
Whether their growth potential comes from a fundamental perspective that the company is undervalued, or overarching bullish sentiment that is pushing equities higher, here are 4 ASX 200 growth names to have on your watchlist for 2020.
1. EML Payments Ltd (ASX: EML)
EML is slowly becoming a household ASX 200 growth stock given its phenomenal 220% share price increase in 2019. The company transitions into 2020 with numerous growth opportunities in salary packaging, instant gift solutions and gaming card solutions.
EML’s most recent acquisition of Irish payments firm Prepaid Financial Solutions will only further leverage its growth capabilities, giving the company greater leverage in the European region, access to more currencies, extraction of business synergies and revenue contribution. While the EML share price is extended, I believe the business will be re-rated when the full impact of Prepaid Financial Services is absorbed.
2. Nanosonics Ltd (ASX: NAN)
Many consider Nanosonics as ‘the next CSL’ given its market opportunity and growth capabilities. While Nanosonics hasn’t released any market sensitive updates since its AGM back in November, there are still many reasons why Nanosonics is set for another record 2020.
The company’s business activity in Japan remains a key growth market – a preliminary study in Japan found that over 90% of ultrasound probes were contaminated and of the contaminated probes, 50% were found to harbour deadly pathogenic bacteria. It will be interesting to see whether or not Nanosonics have started sales in this region. China also represents a significant market opportunity. The company is only undertaking a preliminary assessment of the market with visits to large hospitals, the Chinese Centre for Disease control and regulatory authorities.
3. Altium Limited (ASX: ALU)
With the US Nasdaq hitting record highs and Chinese semiconductor stocks soaring, Australian tech shares should benefit the positive global sentiment and momentum in tech. Again, Altium is strongly positioned to meet its short- and long-term objectives of being the most dominant printed-circuit board design software.
4. Electro Optic Systems Holdings Ltd (ASX: EOS)
The Electro Optic Systems share price has exploded in the past few days. The company has not released any market sensitive announcements but rising US–Iran tensions could be bullish for this aerospace and defence play.
The company has a strong backlog of confirmed orders and contracts that are expected to grow to ~$630 million by 31 December 2020. EOS has reaffirmed its FY20 guidance of at least 70% growth in earnings before interest and tax over FY19. The company remains confident that continued demand for EOS advanced technology is expected to further support growth around this level beyond 2020.
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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited and Emerchants Limited. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Emerchants Limited and Pointsbet Holdings 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