The Motley Fool

Why I’m buying these 5 ASX growth shares in earnings week

We have a big week ahead. Investors will be keenly tuning in for company announcements to see if they’ve placed the right bets. Trade wars have also shocked financial markets across the globe, with growth shares being hit hard on the ASX. Nevertheless, this could be a time to unlock some fantastic buying opportunities.

Here are 5 growth shares I’m betting on this week.

Altium

Altium Limited (ASX: ALU) is a company that is hard to fault. Its key product, Altium Designer, is a software for designing printed circuit boards. It is a world-class software growing increasingly attractive as the internet of things (IoT) market is projected to reach $75 billion in the next 6 years. Not only this, Altium is a debt-free, high-growth tech company with a return on capital of 31%, significantly higher than the average in the software industry of 19%. 

Altium’s stock price is up 48% for the year, closing at $32.08 on Friday. Don’t let its price-to-earnings (P/E) ratio of 91x scare you away – this means investors are scrambling to buy into the company’s future growth. 

Earnings announcement: 19 August 

Nanosonics 

Nanosonics Ltd. (ASX: NAN) has shot up by 40% in the year-to-date, for a close of $4.83 last Friday. The company had a successful HY19, with profit expanding 221% due to strong market penetration in the United States (US), Europe and across Australia. Nanosonics has also been planning ahead, developing further related consumables for its customer base. 

The company also has an expected earnings growth of 47% and no short-term debt obligations to fill. Nanosonics has a great history and a very positive future outlook. I’m for sure going to be placing big bets on this health company. 

Earnings announcement: 21 August 

a2 Milk

A2 Milk Company Ltd (ASX: A2M) is up a whopping 43% in the year to date. Nevertheless, the stock price has experienced a sharp downturn in the last two weeks, dropping from $17.13 to $14.84 on Friday. Amid a shaken trade situation in China, its government also committed to raising the market share of domestically produced infant formula to 60% earlier in the year. As a large portion of the company’s revenue is driven by Chinese exports, this news is critical for a2, as well as for the future of all Australian infant formula producers. Despite this, a2 recently landed a new partnership with JD Worldwide to boost its distribution channels. 

a2 Milk is known to beat investor expectations, and I’m confident the company had a good run in FY19. 

Earnings announcement: 21 August 

WiseTech Global

WiseTech Global Ltd (ASX: WTC) is a critical player in the supply chain and logistics ecosystem, with 38 of the 50 biggest logistics companies using WiseTech’s products. Its business model is highly lucrative, as it charges its customers on a per-use basis. This means that as its customers grow, so too does WiseTech’s revenue. This was key to the company’s epic HY19 results. Earnings before interest, tax, depreciation and amortisation (EBITDA) skyrocketed by 52% and revenue rose a whopping 68%. 

Nevertheless, the company is being hit hard by the China–US trade wars, as its product supports exporters/importers. This has seen its stock price drop 20% in the last three weeks despite still rising 95% in the year to date. WiseTech is still expected to deliver a strong guidance between 47% to 53%. 

Earnings announcement: 21 August

Webjet

Webjet Limited (ASX: WEB) has had a rough 2019. While its share price is up 19% in the year to date, this is 25% lower than its peak of $16.87 in May. This has largely been due to uncertainties in the global market hitting the travel industry hard, as well as some questionable decisions in HY19 with the Thomas Cook deal.

Nevertheless, Webjet’s growth metrics remain strong. Earning per share growth averages 36% per annum over the last 5 years. Its B2B segment, WebBeds, has also been a highlight for investors having grown 50% in the first half of the year. Furthermore, the company has been investing in blockchain capabilities, which are expected to boost productivity. The company is still expected to hit EBITDA of 120 million. Given these positive metrics, Webjet’s current share price could be a huge bargain.

Earnings announcement: 22 August 

If you want more ASX stock recommendations, take a look at these high-flying shares below. 

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully frankded yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

Audrey Thehamihardja has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Altium, Nanosonics Limited, and WiseTech Global. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Nanosonics Limited and Webjet Ltd. 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.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!