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.