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Where I’d invest $10,000 in ASX shares for growth

$10, $20 and $50 noted planted in the dirt signifying asx growth shares
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I think there are always ASX share ideas to buy for growth with $10,000.

It’s true that a number of some of the ASX’s most promising businesses have been going up recently. Two of the ASX shares I’ve covered a lot over the past couple of months – Redbubble Ltd (ASX: RBL) and Citadel Group Ltd (ASX: CGL) have both shot up since the start of September. Though I reckon Redbubble is still one to watch.

There are other ASX shares that I think still look like good long-term buys for growth today:

Pushpay Holdings Ltd (ASX: PPH) – $4,500

Pushpay is one of the ASX shares that I still have high conviction in at this level. The Pushpay share price has gone up 121% over the past six months, but I think the market still hasn’t completely the recognised the longer-term opportunity with Pushpay.

If you don’t know what it does, it facilitates digital giving to clients, namely large and medium US churches. Pushpay thinks the sector is a huge opportunity. Over the long-term it’s aiming for US$1 billion of annual revenue.

Not only does that goal represent a huge revenue growth opportunity, but it’s the scalability of the business that is very attractive to me. In FY20 alone it increased its gross profit margin by 5 percentage points from 60% to 65% and it also managed to increase its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin from 17% to 22%. Pushpay expects to at least double its EBITDAF in FY21.

I think that Pushpay can become a much more profitable business. The Pushpay share price is trading at 41x FY21’s estimated earnings. I think the COVID-19 conditions will accelerate the adoption, causing profit in FY22 and beyond to be better than expected.

City Chic Collective Ltd (ASX: CCX) – $3,500

City Chic is a plus-size retailer of clothes, footwear and accessories for woman.

Compared to many other retailing ASX shares, City Chic managed to sell an impressive amount of product online in FY20. Of total sales, 65% were online in FY20. What’s also pleasing about City Chic’s sales is that it is becoming an increasingly global retailer.

In FY20, 42% of its global sales were from the northern hemisphere. This has come about from both organic sales to North America and Europe as well as a few targeted acquisitions by the retailer.

This COVID-19 period is difficult for retailers that don’t have a good online presence. I like City Chic’s tactic of trying to buy distressed competition globally for a discounted price, then turning them into online-only offerings.

At the current City Chic share price it’s trading at 19x FY23’s estimated earnings.

BWX Ltd (ASX: BWX) – $2,000

BWX is a fairly unique ASX share. It manufactures and sells natural beauty products under a number of a brands including Sukin, Mineral Fusion and Andalou Naturals.

In FY20 BWX revealed net revenue growth of 26% to $187.7 million, earnings before interest, tax, depreciation (EBITDA) went up 30% to $27.5 million and statutory net profit grew 59% to $15.2 million.

That was a really good turnaround from a couple of years ago. One of the most pleasing factors from the report was that BWX said it is continuing to gain market share.

The beauty industry is a huge market. As long as BWX remains agile and innovative, I think it has a long growth runway. I like the plan to build a new manufacturing hub in Melbourne which will help it deliver growth for years to come.

In FY21, management are expecting to grow revenue and EBITDA by at least 10%.

Its valuation still looks reasonable when you look at the longer-term. At the current BWX share price, it’s priced at 22x FY23’s estimated earnings.

There are also other ASX shares if you’re looking for growth besides BWX, City Chic and Pushpay.

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Returns as of 6th October 2020

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended BWX Limited. 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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