There's an old saying that a more superstitious investor might tell you – 'sell in May, go away'. Not being one for such superstitions myself, here are two ASX growth shares I would consider buying this April, that I believe have the potential to ward off this adage with their stellar performance to date.
The A2 Milk Company Ltd (ASX: A2M)
The A2 milk company was founded in 2000 in New Zealand and has made a business out of selling milk and other dairy products containing only A2 proteins (traditional milk contains A2 as well as A1 proteins). The company has been a famous 'twenty-bagger', rising from its 2015 IPO price of around 55 cents to recently make an all-time high of $14.38 at the start of March and is now trading around $13.50 at the time of writing.
People can't seem to get enough of A2's products (or shares for that matter). The company boasts that it is the top-selling infant nutrition brand in Australia with a 32% market share, as well as being the brand of choice for millennials. A2 also can claim a 5.1% market share in China, which is where the real growth story lies. Revenue from Asian markets has increased to $234 million in 2018 – an astonishing 163% rise from the previous year and with only a small market share so far in China, there is definite room for additional growth. As 'Brand Australia' becomes increasingly popular across Asia, I am extremely bullish on a2 Milk's long-term prospects.
Treasury Wine Estates Ltd (ASX: TWE)
Treasury Wine Estates is one of the world's largest wine companies, and with household names like Penfolds, Pepperjack and Wolf Blass in its stable, its easy to see why. Treasury own dozens of brands across all varieties of wine, which it sells in more than 70 countries around the world. With vineyards in Australia and New Zealand as well famous wine regions such as the Napa Valley in California and Tuscany in Italy, the company can vaunt a truly global business. Although its share price hasn't grown as rapidly as A2 Milk, investors who bought around four years ago at around $4 would be very happy when the stock touched over $20 late last year. It has since pulled back somewhat and is now trading around $14.70 at the time of writing.
In its latest results, Treasury reported that its net revenue has grown 16% to approximately $1.5 billion, the strongest organic growth rate in the company's history. This was partly due to the 31% growth in earnings from Asia, which is very encouraging going forward. Treasury also expects underlying earnings growth of around 25% for 2019 and between 15% – 20% for 2020. On these numbers, it's quite easy to feel bullish on the company's future.
Foolish Takeaway
Both of these companies are fantastic growth stories and are highly exposed to the emerging markets in Asia, which bodes very well for their long-term growth in my opinion. Unfortunately, the market seems to share this opinion, with Treasury wines trading on a P/E ratio of 27.12 and A2 Milk on a whopping 74.9. These stocks are quite highly priced, and I will be waiting for a 'buy-the-dip' opportunity for both.
