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2 explosive ASX growth stocks to put on your watchlist

Investors tend to have tunnel vision when looking at the ASX 200, often focusing all their attention on the market darlings such as Afterpay Touch Group Ltd (ASX: APT) and A2 Milk Company Ltd (ASX: A2M).

In my opinion, it’s good to cast your eye further afield. Here are two strong ASX growth stocks that are worth adding to your watchlist.

1. Electro Optic Systems Ltd (ASX: EOS)

Electro Optic Systems is an Australian technology company that operates in the aerospace and defence markets. EOS defence systems specialises in technology for weapon systems optimisation and integration such as key next-generation vehicle turrets and remote weapons systems. EOS space systems specialises in applying EOS-developed optical sensors to detect, track, classify and characterise objects in space. This information can be applied to managing space assets to avoid collisions, missile defence and space control.

In an announcement back in late May, EOS announced that it had secured sufficient orders and market momentum to maintain a compounding growth rate of more than 45% beyond 2020. For the current calendar year, it stated that it is on track to deliver EBIT of around $20 million, which represents an increase of approximately 180% in EBIT compared to 2018.

Seeing a company confidently announce a >45% growth rate while trading at a price-to-earnings (P/E) ratio of only 25 is quite a rare sight. I believe EOS is great value at today’s prices and current market volatility may present a good opportunity to enter.

2. Dubber Corporation (ASX: DUB)

Dubber is a scalable call recording service that has been adopted as a core network infrastructure by multiple global leading telecommunication carriers in North America, Europe and Asia Pacific. The company is a disruptive innovator in the multi-billion dollar call recording industry, its software-as-a-service offering removes the need for hardware, productisation or capital expenditure.

The company announced its quarterly update last week with key metrics including a 28% rise in revenue to $2.03 million, a 269% increase in annual operating revenue to $5.54 million and telecommunication service providers at the stage of billing increased by 3 to 106, increasing from 36 to 106 from June 2018.

With $19.6 million cash at the bank, the company is fully funded to execute its growth strategies and leverage significant commercial growth opportunities with its leading global technology.

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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