I think the best way to beat the market is to identify shares that are going through a strong growth phase.
Businesses that are on a profit winning streak tend to keep winning and sometimes outperform investor expectations which can lead to outperformance of the share price.
Two shares that I think are poised for big growth in 2020 are:
Bubs Australia Ltd (ASX: BUB)
I think Bubs is Australia's most promising infant formula business with its focus on goat milk products, but it is also launching a cow-based, grass fed organic infant formula product.
Bubs has done an excellent job at securing its milk supply and acquiring a CNCA certified production facility. It has a great supply chain.
The share price has drifted 30% lower over the past four months. In the first quarter of FY20 Bubs reported revenue growth of 58%. It if keeps growing revenue at an impressive double digit rate it will only be a matter of time before it turns into attractive profit growth and hopefully share price growth.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is an electronic donation payment business, it services not-for-profits such as large and medium churches which means it receives regular annual donations.
The company has very promising growth prospects as it wins more church clients. It could also benefit from good organic growth and synergies from the Church Community Builder acquisition.
In the half-year result to 30 September 2019 it reported revenue growth of 30% to US$57.4 million. Pushpay also managed to grow its gross profit margin from 57% to 65%, which helped the earnings before interest, tax, depreciation, amortisation and foreign exchange (EBITDAF) to rise by 413% to US$9.6 million. Net profit grew 247% to US$6.5 million.
If revenue keeps rising strongly it could lead to even higher profit margins and fast-growing profit for Pushpay.
Foolish takeaway
I believe both of these shares have excellent growth prospects for 2020 and beyond. At the current prices it's hard to pick a favourite. It could be more opportunistic to buy Bubs today, but Pushpay is already profitable right now and could surprise investors over the next year or two.
