Growth shares have had a tough month, but now that they're in the red this could be a unique buy opportunity.
Here are two stocks on the S&P/ASX 200 (INDEXASX: XJO) index that I think you should consider investing into before full-year results are announced.
Webjet Limited (ASX: WEB)
Webjet is both a B2C and B2B digital travel agency. It enables users to compare and combine flights, accommodation, packaged holiday deals, insurance, and hire cars domestically and internationally.
A few days ago, Webjet released a presentation that focused on updates to its blockchain applications. Rezchain is the company's blockchain-enabled technology platform used in its B2B sector to manage settlements between hotel suppliers and travel partners. The company's most recent innovation is Rezpayments, which is designed to ensure the storage of Webjet's customer credit card information complies with Payment Card Industry Data Security Standards.
Despite this positive news, over the last month the stock price has fallen 8.7% due to weakness in global markets.
So, should you buy Webjet in advance of its full-year earnings call? The company is expecting $120 million revenue, which is 37% higher than its 2018 earnings. While a price-to-earnings (P/E) ratio of 35x sounds high, it reflects strong confidence in Webjet's performance.
A2 Milk Company Ltd (ASX: A2M)
a2 Milk is an Australian company that sells A1 protein-free milk. In the last month, a2 Milk's share price has fallen 12.6% to $13.22.
One factor contributing to a2's share price fall was last week's announcement from China's State Administration of Market Regulation (SAMR), affirming its dedication to implementing the e-commerce legislation it passed in April 2019, which relates to all goods and services transacted via e-commerce platforms.
Managing Director and CEO of a2, Jayne Hrdlicka, responded to the news, explaining that this announcement signals China's intention to increase the focus on supervision and enforcement of the e-commerce legislation, standardise e-commerce business practices, and "enhance the integrity of the digital market (including advertising and marketing) and maintain good e-Commerce market order".
With a2 Milk's growth being contingent on strong success in the Chinese market, this is likely to impact bottom-line sales, due to the increased costs that the company will face in ensuring its products are genuine.
Nevertheless, I'm confident a2 Milk will be a good buy in the lead up to its full-year results. In its half-year earnings EBITDA achieved a 52.7% growth rate. A critical part of this was the growth in the company's share in the baby formula market. This rose from 6% from 5.4% in December last year, and a2 Milk continues to increase its marketing spend in this lucrative segment.
