There are a large number of growth shares to choose from on the Australian share market. So many, it can be hard to decide which ones to buy ahead of others.
To help narrow things down, I have picked out two ASX growth shares that have been rated as buys. They are as follows:
Domino’s Pizza Enterprises Ltd (ASX: DMP)
The first ASX 200 growth share to look at is this pizza chain operator. Domino’s has been growing at a consistently solid rate for over a decade thanks to the popularity of its offering and the expansion of its footprint.
The good news is that consumer tastes aren’t changing and its pizzas remain as popular as ever. The even better news is that management still sees plenty of room to grow its footprint over the next decade.
For example, at the end of the first half, the company had a network of 2,800 stores. It is now aiming to double this over the next decade in its existing markets. Management is also looking for acquisitions and has been tipped to expand into new territories in the future. This would give the company an even larger growth runway.
Bell Potter currently has a buy rating and $122.00 price target on the company’s shares. It notes that with a leverage ratio of 1.1x, it has $446 million in funding headroom, providing it with ample capacity to make acquisitions.
Xero Limited (ASX: XRO)
Another ASX 200 growth share to look at is Xero. It is a leading cloud-based business and accounting software provider with a focus on small to medium sized businesses.
Xero recently released its full year results and reported an 18% increase in revenue to NZ$848.8 million and a 39% jump in EBITDA to NZ$191.2 million. This was underpinned by a 20% increase in subscribers during the 12 months to 2.74 million.
This comprises ANZ subscribers of 1.56 million and International subscribers of 1.18 million. In respect to the latter, there are now 720,000 subscribers in the UK market and 285,000 in North America. While this is a large number, it is still well short of its global market opportunity. Management estimates that the cloud accounting subscriber total addressable market is 45 million.
This gives Xero a huge runway for growth in the future, which should be bolstered by its burgeoning app ecosystem. The latter has been bolstered recently by a number of bolt on acquisitions such as Planday, Tickstar, and Waddle.
Goldman Sachs is very positive on its future. In light of this, it recently reaffirmed its buy rating and $153.00 price target on the company’s shares.