The Australian share market is home to a number of quality companies with solid growth prospects.
Two that have been tipped to grow strongly over the long term are listed below. Here’s why analysts think investors should be buying their shares:
Adore Beauty Group Ltd (ASX: ABY)
Adore Beauty is Australia’s leading online beauty retailer and has been growing strongly in FY 2021 thanks to the shift to online shopping.
And while the company’s growth is likely to moderate significantly in FY 2022 when trading conditions return to normal, it looks well-placed for growth in the years that follow. Particularly given the aforementioned shift online, which is still in its infancy for the beauty and personal care (BPC) market.
Management notes that the BPC market in Australia is worth $11.2 billion and is expected to grow at a 26% CAGR to 2024. Furthermore, online sales currently comprise 11.4% of the BPC market, which is a notably lower rate of penetration than in developed markets like the US, UK and China.
UBS is a fan of the company. Its analysts currently have a buy rating and $5.40 price target on the company’s shares. The broker believes Adore Beauty’s sales could double between FY 2021 and FY 2025.
IDP Education Ltd (ASX: IEL)
Another ASX growth share to look at is IDP Education. It is a leading provider of international student placement and English language testing services, and the co-owner of the International English Language Testing System (IELTS). This is the English test that is trusted by more governments, universities and organisations than any other. It also operates English language teaching schools in South East Asia.
While demand for its services has unsurprisingly being hit hard by COVID-19, trading conditions have been improving. For example, at the end of the first half, the company reported that testing volumes were broadly in line with those experienced in the final month of 2019 before the pandemic. And although recent outbreaks since then may have stifled its recovery, it looks well-placed to continue it once things are under control again.
Morgan Stanley remains very positive on the company. It recently retained its outperform rating and $30.00 price target on its shares.