Valuation and growth have come under the spotlight recently, after the plug was pulled on the WeWork IPO amid negative publicity and huge cuts to its once sky-high valuation.
But here are 2 leading ASX growth shares, both of which have set ambitious targets that will deliver enormous shareholder value, if achieved.
1. Jumbo Interactive Limited (ASX: JIN)
The Jumbo Interactive share price took a nose dive after the announcement of its full-year earnings. Was the report bad? No. But does the company fetch an expensive valuation? Yes.
A few weeks following the full-year result, Jumbo recovered the 10% dip and pushed forward to make a new all-time high. It delivered a pleasing report that saw its revenue soar 64% while net profit after tax more than doubled, rising by 123.5%. Jumbo has set an ambitious goal of reaching $1 billion in ticket sales by FY22. Its current sales for FY19 are just $320 million. So how does Jumbo intend on three-folding its sales?
The company is positioned front and centre of the growing trend of buying lottery tickets on a mobile app. Jumbo posses a market-leading user experience with product initiatives such as online mobile syndication (the first in Australia). Continued investment and innovation in its digital footprint will continue to build momentum for mobile lottery sales.
Furthermore, Jumbo has also introduced its own software as a service (SaaS) for lottery operators. This SaaS is targeted for traditional lottery operators that are seeking to move online. The company currently has 2 SaaS agreements that are expected to bring in SaaS ticket sales in excess of $100 million p.a. It expects to sign at least another 2 agreements by the end of the year.
On a geographic front, Jumbo is witnessing the US lottery market opening up to mobile, while the UK also represents a expansion opportunity.
2. Afterpay Touch Group Ltd (ASX: APT)
Afterpay’s mid-term growth strategy is to achieve a targeted $20 billion in gross merchant value (GMV) at a net transaction margin (NTM) of 2%. In FY19, the company reported a GMV of $7.2 billion at an NTM of 2.4%. The Afterpay share price is showing early signs of shrugging off regulatory concerns, broker downgrades and the negative sentiment spurred by the unsuccessful WeWork IPO.
I believe Afterpay is an unstoppable force that has yet to meet its immovable object. The company’s performance shines across all metrics. It’s currently partnered with more than 35,300 merchants with a global merchant acquisition run-rate in excess of 1,900 new merchants per month. On the customer front, it is currently attracting over 12,500 new customers to the global platform every day.
In my opinion, the growth trajectory and potential for Afterpay remains comparable to the likes of payments behemoth Visa and Mastercard. General market sentiment, regulatory concerns and valuation may impact the share price. But Afterpay remains a strong long term investment for the foreseeable future.
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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Jumbo Interactive Limited. 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.