Some ASX growth shares could make interesting considerations in June 2021 as share prices change and businesses continue to grow.
Investors usually get just two, or perhaps four, insights into a business’ performance over a 12-month period. But some businesses are consistently growing in size throughout that period, even if investors don’t get monthly confirmation of that.
These are two ASX growth shares that could be good to look into for June 2021 and beyond:
Xero Limited (ASX: XRO)
Xero is a leader in the cloud accounting software space. The Xero share price has fallen by around 10% since 16 April 2021.
The business is one of the few ASX shares that could claim to be a global leader in their industry. It already has a strong market position in Australia and New Zealand with over 1.5 million subscribers between those two countries alone.
Its market share in the UK is quickly rising. In its FY21 result, UK subscribers grew by 17% to 720,000. Its online offering, which includes plenty of automation tools, is proving popular in that market.
Whilst it doesn’t have a huge amount of subscribers in other countries, it is still growing numbers and revenue rapidly. North America saw subscriber growth of 18%. The rest of the world saw subscriber growth of 40% to 175,000, with revenue growth of 32% in constant currency terms.
Xero has a very high gross profit margin of 86%. That means these new subscribers are pretty profitable for the business. The main reason its net profit isn’t shooting higher is that it’s investing heavily for long-term sustained growth.
The ASX growth share stated:
Xero will continue to focus on growing its global small business platform and maintain a preference for re-investing cash generated, subject to investment criteria and market conditions, to drive long-term shareholder value.
Australian Ethical Investment Limited (ASX: AEF)
At a share price of $8.74, the Australian Ethical share price has fallen 10% in just under a week, presenting a lower price for potential investors.
Its investment philosophy is focused around “leading edge” ethical frameworks. It has been doing this for over 30 years.
Before I get to some financial information about the company, investors may want to know that Australian Ethical donates 10% of its annual profit through its foundation to charitable organisation and social impact initiatives.
Managing superannuation money is a key part of the business, although it sees a “strong” growth opportunity in the investment space. It’s also looking to grow in the advised channel and high net worth (HNW) segment, whilst continuing to foster the direct channel, which is where 83% of netflows are coming from.
The business is expecting growth from investing in its business and operating leverage from achieving greater scale. Australian Ethical could benefit from the trend of increasing demand from people for greener products and services.
Since 31 March 2021, the fund manager has seen 5% FUM growth to $5.68 billion. That’s a 40% rise from 30 June 2020.
It’s expecting that underlying profit after tax before performance fees for FY21 will be between $8.8 million to $9.3 million. That would represent a mid-point increase of 29% compared to FY20.