Motley Fool Australia

2 rapidly growing ASX shares rated as buys

arrow exploding over rising finance chart
Image Source: Getty Images

In this article are two ASX shares that are rapidly growing and rated as buys.

The Motley Fool investment services are always combing the market for some of the best opportunities for returns.

These are two businesses that are currently rated as buys by one of the services:

Bapcor Ltd (ASX: BAP)

Bapcor is the largest auto parts business in Australia and New Zealand. It has a variety of businesses. Burson Auto Parts provides parts quickly to mechanics across the country. It has a variety of wholesale specialist businesses including AAD, it also recently acquired the Commercial Truck Parts Group which provides parts for light and heavy commercial trucks. It has a retail segment with its key business being Autobarn. Bapcor has service businesses such as Midas and ABS. Finally, the company has a growing presence in Asia, with a network in Thailand.

The auto parts ASX share recently revealed that in the first quarter of FY21 it saw total revenue growth of 27%, despite government COVID-19 restrictions in Victoria and Auckland.

Burson Trade experienced revenue growth of 10%, with same store sales growth of 7.7% – there was 17% growth excluding Victoria. New Zealand revenue grew 6% and same store sales rose 4%. Retail revenue soared 47% with Autobarn same stores sales going up 36% and AB Company same store sales rose 50%. Finally, specialist wholesale revenue grew by 45%, though excluding acquisitions revenue rose by 18%.

Bapcor CEO Darryl Abotomey spoke of the company’s defensive qualities in the trading update: “The automotive market is a resilient industry and historically has performed strongly in difficult economic circumstances. Recent trading is another example of its resilience assisted by the increase in sales on second hand cars, reduction in use of public and shared transport modes as well as government stimulus.”

The ASX share expects to deliver a strong first half, though it couldn’t provide a forecast of earnings for the current year due to uncertainty.

Bapcor is currently rated as a buy by the Motley Fool Share Advisor service. According to Commsec, it’s valued at 18x FY23’s estimated earnings.

Temple & Webster Group Ltd (ASX: TPW)

This is an online furniture and homewares business.

In FY20 the ASX share generated revenue growth of 74% year on year to $176.3 million. Second half revenue rose by 96% and fourth quarter revenue went up 130%.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 467% to $8.5 million. Cashflow was positive during the year and it ended with cash of $38.1 million with no debt. During FY20 active customers went up 77% year on year to 480,000.

Like Bapcor, growth has continued into the first quarter of FY21. Year to date revenue, between 1 July 2019 to 19 October went up by 138%.

The first quarter of FY21 saw EBITDA generation of $8.6 million, which was more than the full FY20 year EBITDA.

Temple & Webster said that October revenue growth was still more than 100% which management said was pleasing because it’s coming into the most important trading time of the year.

At the time of the trading update, the ASX share said its contribution margin continued to be ahead of its 15% target.

Temple & Webster was pleased to point out that customer satisfaction remains at record levels, with its net promoter score of around 70% and newer cohorts continuing to perform better than historical comparisons.

The ASX share said that it’s committed to a high-growth strategy to take advantage of the structural shift towards online, capitalising on both organic and inorganic (acquisition) opportunities.

Temple & Webster is currently rated as a buy by the Motley Fool Share Advisor service.

At the current Temple & Webster share price, it’s valued at 37x FY22’s estimated earnings.

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 has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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.

Related Articles…

Latest posts by Tristan Harrison (see all)