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2 high quality ASX growth shares to buy immediately

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The Australian share market is home to a large number of companies that have been tipped to grow strongly in 2021 and beyond.

Two that you might want to get better acquainted with are listed below. Here’s what you need to know about them:

Altium Limited (ASX: ALU)

The first growth share to consider is Altium. If you look inside most electronic devices you will find a printed circuit board (PCB). These circuit boards have highly complex designs and are integral to the operation of these devices. This means specialist software is usually required to design and manufacture them.

Altium is a leading PCB design software company which is aiming to dominate the industry with its Altium Designer and cloud-based Altium 365 platforms. The latter in particular is being seen as the main driver of growth in the future and the key to it achieving its target of 100,000 subscribers and US$500 million in revenue by FY 2026. This compares to its subscribers of 51,000 and revenue of US$189 million in FY 2020.

And while the pandemic is having an impact on demand for its platform right now, management remains very positive on its long term growth trajectory.

One broker that remains confident on the company’s prospects is Credit Suisse. Its analysts have an outperform rating and $35.00 price target on the company’s shares. This compares to the current Altium share price of $28.75.

Xero Limited (ASX: XRO)

Another growth share to look at is Xero. After starting life as an accounting software provider, Xero has successfully evolved into a full service cloud-based small business solution over the last few years.

This has underpinned very strong customer and recurring revenue growth. For example, at the end of the first half of FY 2021, Xero reported a 19% lift in subscriber numbers to 2.45 million and a 21% increase in operating revenue to NZ$409.8 million.

Since that the release, the company has raised US$700 million to support its growth. Given its substantial cash balance, there is speculation Xero could be plotting a major acquisition in the near future. Especially given its track record of making bolt-on acquisitions that strengthen its offering. One of these was the acquisition of cloud-based lending platform Waddle for $80 million in August last year.

Analysts at Goldman Sachs are very positive on Xero. The broker recently put a buy rating and $157.00 price target on its shares. Goldman believes Xero can grow its subscribers to 7.4 million by 2030 and generate NZ$3.4 billion in annual revenue from them. After which, it sees opportunities for strong multi-decade growth thanks to its expanding total addressable market.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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