Like all financial markets, ASX shares produce winners and losers.
Some companies soar to spectacular market capitalisations as their product or service takes off. Others see share prices deteriorate as markets and demand shift.
When investing in shares, downside risk is capped – you cannot lose more than what you put in. But upside potential is unlimited – there is no ceiling to how high share prices can go.
We take a look at 5 top ASX growth shares where, had you invested $10k in each of these shares 3 years ago, you would be sitting on more than $1.3 million today.
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Avita Therapeutics Inc (ASX: AVH)
The ASX share price in Avita Therapeutics has gained a whopping 8944% over the past 3 years, which means a $10k investment made in August 2017 would now be worth $894,400.
Avita is a regenerative medicine company with a technology that allows the production of spray-on skin from the patient's own skin cells. This RECELL System is used to treat burns and other wounds, improving healing and scar appearance. RECELL System sales grew 213% in FY20, but sales growth ground to a halt in the fourth quarter as a result of the impacts of the coronavirus pandemic.
Although April sales were the lowest in 2020, procedural volumes resumed in May and June. Physicians have embraced the benefits of the RECELL System, which include reduced hospital stays and fewer surgeries. The system is also being assessed for use in treating vitiligo, scar reconstruction, and for aesthetic applications. This could substantially increase the company's addressable market.
Afterpay Ltd (ASX: APT)
The Afterpay share price has gained 2066.12% over the past 3 years, making a $10,000 investment now worth $206,600. Afterpay has seen massive growth in customer numbers and transaction volumes during this period. In FY17, Afterpay had 6,000 merchants and 1 million customers in Australia and New Zealand. Underlying sales were around $560 million.
Now Afterpay has 5 million customers in the United States, and close to 5 million across Australia, New Zealand, and the UK. The company had 48.44k active merchants in March 2020. Underlying sales in the nine months to March 2020 grew 105% on the prior corresponding period to $7.3 billion.
Afterpay is now available through Apple Pay and Google Pay in select US stores, with roll out to Australia scheduled for coming months. The buy now, pay later provider has benefitted from the shift to e-commerce prompted by coronavirus, with sales accelerating in Q4, up 127% on the prior corresponding period.
Polynovo Ltd (ASX: PNV)
The Polynovo share price has gained 1023.08% over the past 3 years, meaning your original $10k investment would now be worth $102,308.
Back in FY17, funding from the Biomedical Advanced Research and Development Authority (BARDA) was Polynovo's main source of revenue. The company reported total revenue of $3.6 million for FY17 with the NovosorbBTM product available in the US, Australia, South Africa, and New Zealand. Now the product is being used globally, and Polynovo is predicting product sales in FY20 will double those of FY19. In FY19 sales increased 435% on the previous year to $9.348 million.
Polynovo recently received US$15 million in funding from BARDA for a clinical trial evaluating the efficacy of the Novosorb BTM product. This will allow Polynovo to apply for FDA approval of the product. Novosorb BTM is based on a unique polymer technology with potential applications in the hernia and breast reconstruction markets. The company is building a hernia product factory in Port Melbourne and plans to enter the US hernia market in 2021.
Appen Ltd (ASX: APX)
The Appen share price is up 790.56% over the past 3 years. This makes a $10k investment made 3 years ago worth $79,056. Appen provides data for the development of machine learning and artificial intelligence products.
In the year ended 31 December 2017, Appen recorded revenues of $166.5 million. Just two years later, in 2019, Appen recorded $536 million in revenue, a 223% increase. Appen's existing customers have underpinned revenue growth with increased demand for new and existing projects.
In the current financial year, Appen has made a substantial investment in sales and marketing to lay the foundation for future growth. Government artificial intelligence spend is a target, as is the Chinese market. Appen has reported that the COVID-19 pandemic has had a minimal impact thus far. Earnings have been resilient although the economic downturn may impact smaller customers. Nonetheless, the company is well placed to ride out the downturn with a cash balance of more than $100 million and low capital requirements.
Megaport Ltd (ASX: MP1)
The Megaport share price has gained 500.45% since 2017, meaning a $10,000 investment made 3 years ago would be worth $50,045.
Megaport operates in the network-as-a-service space. The company provides bandwidth which allows users to connect to cloud services and data centres.
In FY17, Megaport reported $10.7 million in revenues with total monthly recurring revenues of $1.22 million in June 2017. Now Megaport has monthly recurring revenues of $5.7 million and reported revenue of $17 million in just 4Q FY20.
Megaport has focused on expanding its network footprint to new markets and deepening its reach in existing ones. It established a presence in Denmark and Spain in 4Q FY20, bringing the Megaport platform to 23 countries and 128 cities globally. In June 2020, Megaport reported 1,842 customers, up from 738 at the end of FY17.
The company has continued its strong growth momentum through the pandemic, with the platform enabling customers to flexibly respond to the rapidly changing business environment.
