If you are looking to add top-quality ASX growth shares to your portfolio, here are 2 that are worth considering. Both are great Aussie brands, have proven business models and established market positions and exposure to fast growing overseas markets.
SEEK Limited (ASX: SEK)
Australia’s largest online classifieds employment site in Australia, Seek, has had a great run on the ASX over the past decade. Its size and scale enable it to attract even more job seekers and employers, which further entrenches its dominant position, creating an appealing competitive barrier to entry.
Seek is currently trading with a price-to-earnings (P/E) ratio of 48, which although is a bit on the high-side, is reasonable for a top-quality growth share, in my view. It also pays a fully franked dividend of 1.6%.
Although market conditions at the moment are a bit challenging, Seek remains on path to meet its revenue and profitability growth in FY20. Its management expects revenue growth of 15–18% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 8–11% for FY20, which if achieved, would be a very good result.
Seek’s management has set an aspirational revenue of $5 billion by FY25, more than 3 times the revenue it posted in FY19.
I believe Seek is well positioned to continue to deliver strong revenue and profitability growth over the next decade, due mainly to its growing international presence.
Corporate Travel Management Ltd (ASX: CTD)
Corporate Travel’s FY19 earnings revealed EBITDA growth of $150 million, up 20% on the prior year and revenue was up by 21%. This appeared to be a solid result, however investors were somewhat disappointed with its EBITDA growth guidance for the year ahead of only between 10–17%, which was lower than market expectations.
Despite this, the fundamentals and growth prospects of Corporate Travel still appear to be very strong in my view. In particular, there are signs of improving macroeconomic factors in Europe and Asia, including easing of trade tensions between the US and China, which should be a positive boost to the travel sector.
I believe that Corporate Travel is well placed for further share price growth over the next decade, due to its diversified business model and exposure to global growth opportunities outside its local markets. More than 70% of its revenue base is generated outside of Australia and New Zealand and this percentage has been trending upwards each year.
Corporate Travel is currently trading with a P/E ratio of 24.3, which is very attractive for a growth share, and it pays a partially franked dividend of 1.9%.
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Motley Fool contributor Phil Harpur owns shares of carsales.com Limited, Corporate Travel Management Limited, REA Group Limited, and SEEK Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended carsales.com Limited, REA Group Limited, and SEEK 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.