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2 top ASX shares I’d buy with $2,000 right now

Best ASX share

I think the best ASX shares to own in your portfolio are ones that have good revenue growth potential, have a good path to profit growth and are scalable.

There’s not much point going for a business that doesn’t have much revenue growth potential in my opinion unless you’re focused on dividends. Owning mediocre businesses would probably lead to mediocre returns. Going for income may be a poisoned chalice if the share price declines over time.

I believe profit growth is important. The share price of a business is linked to its earnings. If the earnings aren’t going anywhere then the share price may not go anywhere either.

Scalable businesses are really attractive to me because it means they make more profit from revenue growth than they did before. It’s the profit growth that ultimately helps increase the share price and dividends. Finding a business that can generate very strong profit growth is good for potential shareholder returns.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of my top ASX share ideas right now. It’s probably my highest-conviction idea. It helps not-for-profits like US churches receive electronic donations. It also provides livestreaming options for clients to connect with their congregations. It’s very useful in this new COVID-19 world. 

When you can find a great business at a really good price I think you just have to jump on that opportunity.

At the current Pushpay share price it’s priced at 36x FY21’s estimated earnings. I don’t think that’s unreasonable at all considering its growth and how low official interest rates have gone in Australia and New Zealand.

FY20 was an incredible year for Pushpay. It acquired Church Community Builder which really increased the capabilities of Pushpay with the personnel, the access to new clients for both businesses and the ability to offer a combined service. The combined business will hopefully be able to generate more revenue per client.

Pushpay revealed strong revenue growth in FY20 with an increase of 32% to US$129.8 million. In FY21 the ASX tech share is expecting to at least double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF).

The ASX share impressed me most in FY20 with how much its profit margins increased. In FY21 its gross profit margin increased from 60% to 65% and its EBITDAF margin improved from 17% to 22%. The company is aiming for US$1 billion revenue in the coming years, so its margins could go much higher. 

WCM Global Growth Ltd (ASX: WQG)

This ASX share is a listed investment company (LIC) that likes to find businesses with rising competitive advantages and a corporate culture that supports that goal.

A positive moat trajectory for businesses suggests that the companies are getting even stronger, which should lead to good shareholder returns. WCM measures this with a rising return on invested capital (ROIC) as opposed to those with a large but static or declining moat.

In the past it owned shares like Facebook, Apple, Amazon, Netflix and Alphabet, but it has moved on to other opportunities which are seeing regular improvement.

At the end of August 2020, the ASX share’s biggest 10 positions were: Shopify, West Pharmaceuticals, MercadoLibre, Visa, Stryker, Taiwan Semiconductor, Tencent, Lululemon Athletica, Thermo Fisher Scientific and Ansys.

As you can see, there’s a large allocation to IT and healthcare businesses. This offers secular growth for investors. It’s also invested in plenty of businesses that aren’t focused on just the US.

I believe that WCM offers attractive diversification that you can’t really get with ASX shares nor from the most popular exchange-traded funds (ETFs).

It has done very well. Over the past three years its portfolio return (after management fees but before expenses) has been 22% per annum. There’s no guarantee of future performance, but it shows how good WCM is at picking businesses. 

At the current WCM share price it’s trading at a discount of 10% to the net tangible assets (NTA) at 18 September 2020.

Foolish takeaway

I really like both of these ASX shares and I think they could strongly outperform many other ASX shares over the next three to five years. I believe Pushpay could be the best one to buy for growth, but I like the international diversified growth offered by WCM.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Tristan Harrison owns shares of WCM Global Growth Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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.

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