As we’re already halfway through November, there’s no better time to make some new investments before the Christmas season hits. Here are 3 ASX growth companies that I’d think about investing my dollars in this week (instead of gifts, that is).
a2 Milk ($3,500)
A2 Milk Company Ltd (ASX: A2M) has taken some heavy hits recently. Its share price has downsized 20% in the last 2 months, currently trading for $11.58 at time of writing.
This is because competition is picking up in China’s infant formula market. Shijiazhuang Junlebao Dairy Co Ltd. launched an A2-protein-only formula, the first time a larger domestic competitor has ever entered the market. While it’s currently only available for pre-order, investors are clearly concerned this might displace a2 Milk’s position in the market.
Nevertheless, I’m still bullish on this company. a2 Milk has no long-term debt on its balance sheet and its return on equity has been a high 35% over the last 3 years. It has a strong brand in the Chinese market, proven by its 46.1% growth in earnings before interest, tax, depreciation and amortisation in FY19. At these prices, this could be a good time to invest.
This one has been a true star this year. Dubber Corp Ltd (ASX: DUB), which specialises in cloud-based call recording technology, is up 217.94% to $1.24 at time of writing since the beginning of January.
However, Dubber’s share price has softened from its $1.73 high in September. It also failed to meet market expectations on its first quarter update last week. Nevertheless, its growth rates are still impressive. Dubber reported a 200% increase in revenue compared to the prior corresponding period. It also grew its number of end user subscribers 23% higher, surpassing 117,000 customers.
I’ll be keeping a close eye on this one.
The WiseTech Global Ltd (ASX: WTC) share price has had a weak month, plummeting 20% in the month to be trading at $27.44 at time of writing. This was due to allegations by J Capital that it overstated its revenue. Despite this short-term dip, WiseTech’s share price is still up more than 61% in the year-to-date.
In its FY19 results, WiseTech achieved a 49% CAGR over the last four years and maintained a relatively strong profit margin of 48%. WiseTech’s logistics software platform CargoWise One solves an extremely intricate problem for supply chains, which is why its customer attrition rate is only 1%.
Though the logistics company hasn’t amended its 2020 earnings guidance in response to the report, investors aren’t flocking back just yet. I’m keeping close tabs, but I might hold off on investing right away, due to its lofty 147x price-to-earnings ratio.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Audrey Thehamihardja has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk and WiseTech Global. 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.
- My top 3 ASX growth shares for November – November 11, 2019 3:30pm
- 3 ASX growth shares I’d put $10,000 towards this week – November 11, 2019 1:28pm
- A deep dive on WiseTech: why it’s on my watchlist this month – November 7, 2019 1:25pm