In anticipation of earnings season, my eyes are set on these three growth stocks for July. These companies have been ASX stars in 2019 and are poised for more market-beating results.
Altium Limited (ASX: ALU)
Arguably one of my favourite ASX tech shares, Altium continues to impress. The company's main product is Altium Designer, a world class software-as-a-service (SaaS) tool for designing printed circuit boards (PCBs).
For its HY, Altium reported its cash balance to have increased 11% and the company remains debt-free. It also has a high return on capital employed of 31%, significantly higher than the average in the software industry of 19%.
In the last month, the company's share price has risen 18% to $35.27. This has also driven its price-to-earnings (P/E) ratio up to 99x, which may sound incredibly overvalued. However, given the company's track record of beating investor expectations, strong balance sheet, and successful international expansion, this could be a fair price to pay.
Aristocrat Leisure Limited (ASX: ALL)
Aristocrat Leisure is an Australian lot machine developer. It has been particularly strong in expanding in its Americas and digital business, as well as gaining higher penetration in the ANZ region.
The company has achieved strong growth rates to date. In the six months to March 2019, Aristocrat's bottom line grew by 16.8%. It also improved its earnings before interest, taxes, depreciation, and amortisation (EBITDA) by 10.2%, year-on-year, over the same period.
Aristocrat's share price has cooled slightly, falling 7.1% from its peak around two weeks ago. Despite this, its P/E multiple remains relatively high at 29x. This seems reasonable as the company has grown its annual earnings per share (EPS) by 38% compounded over the last 3 years.
BrainChip Holdings Ltd (ASX: BRN)
BrainChip is a semiconductor company in its early stages of developing a neuromorphic system on a chip (NSoC) called Akida. Akida is a hardware version of a biological neuron, making it much more advanced and efficient than current day technologies.
In the last two weeks, its share price fell 26% lower to 6.4 cents. This was due to the completion of an institutional entitlement offer, raising $6.7 million from issuing a further 112.7 million shares. This cash will be channelled towards developing and manufacturing of its Akida product, supported by a partnership with Japan's Socionext that was announced in June.
This price could be a bargain, given BrainChip's unique position in the market and its clear route to commercialisation in 2019. Its spiking neural network (SNN) technology will also be critical as industries like autonomous vehicles require more efficient AI for applications like visual imagery classification.
