Although the S&P/ASX 200 (INDEXASX: XJO) index has dipped on trading today from Friday's levels, it is still close to its all-time high – ensuring that growth investors have remained a happy bunch. With falling interest rates and a truce in the US–China trade war (at least for now), there is every reason to expect further upside in the markets (at least for the short-term). During these happy times, jumping on the wagon of companies that have successful business models with strong revenue growth continues to be a winning trend.
Here are two ASX companies that have proven to be winners before and show no signs of changing their stripes.
A2 Milk Company Ltd (ASX: A2M)
The a2 Milk Company has been a favourite for growth investors for a while now, and for good reason. The a2 share price has risen by more than 2,512% over the past 5 years (not a typo) and the shares are up more than 40% for the year so far to boot! The company has been growing its impressive numbers with insatiable demand from the Chinese market, as well as its expanding American efforts.
The company provided an update in March and revenue numbers were up 41%, year-on-year. There is definitely a lot of petrol (or milk?) left in the tank for a2 Milk and I believe the company has a long growth runway ahead of it.
Xero Limited (ASX: XRO)
Xero is another investor favourite and backs this up with a membership of the exclusive and high-growth WAAAX club (a group of Australia's better-known technology stocks). Xero sells its "beautiful" accounting software as a cloud-based software-as-a-service (SaaS) subscription and has been dominating in its market.
For the year ending 31 March, Xero announced a 32% year-on-year growth rate for revenue, while subscriber growth came in a 31%. While Xero is still not a profitable company (posting a $27.1 million loss for the period), the company is clearly focusing on revenue growth and the lack of profitability is (in my opinion) not worth much concern at this point, considering these strong numbers. Xero has a remarkably sticky customer retention rate and is a worthy growth company to merit consideration this week.
Foolish takeaway
Both of these companies have demonstrated they have what it takes to be quality buy-and-hold shares. Whether you're willing to pay today's prices for them will be a personal call, but I'm confident in both companies' abilities to dominate their respective fields over the next decade.
