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Why I would buy Xero and these ASX growth shares

James Mickleboro
Man holding tablet with sharemarket chart showing growth shares

If you’re interested in growth shares then you’re in luck. The Australian share market is home to a good number of companies that are growing at a very strong rate.

Three which I think investors ought to consider buying this month are listed below. Here’s why I like them:

NEXTDC Ltd (ASX: NXT)

NEXTDC is one of the ANZ region’s leading data centre operators. And while its shares look expensive on paper, I believe they could prove to be good value over the long term. This is because of the cloud computing boom which continues to accelerate. As cloud computing usage increases, demand for NEXTDC’s innovative data centre outsourcing solutions and connectivity services should increase significantly and drive strong earnings growth as it scales.

ResMed Inc. (ASX: RMD)

ResMed is one of the world’s leading sleep treatment companies.  It caught the eye in FY 2019 when it delivered an 11% increase in full year revenue to US$2.6 billion and an 18% lift in operating profit to US$716.3 million. Pleasingly, ResMed has continued this strong form in FY 2020, delivering a 22% lift in first half operating profit to US$368.9 million. I believe ResMed is well-placed to continue this strong form for some time to come thanks to the massive number of undiagnosed sleep apnoea sufferers globally.

Xero Limited (ASX: XRO)

Another growth share to consider buying is this cloud-based business and accounting software provider. It was a very strong performer in FY 2019 and has started the new financial year in an equally positive fashion. During the first half the company’s Annualised Monthly Recurring Revenue (AMRR) increased 30% on the prior corresponding period to NZ$764.1 million. This was driven by a 30% jump in subscriber numbers to 2.057 million. I expect more of the same over the coming years thanks to the quality and stickiness of its product, the shift to online accounting, and its large market opportunity.

The post Why I would buy Xero and these ASX growth shares appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended ResMed Inc. 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