Why analysts rate Afterpay (ASX:APT) and this ASX growth share as buys

These growth shares have been given buy ratings…

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If you’re looking for some growth shares to add to your portfolio, then you might want to look at the ones below.

Here’s what you need to know about these highly rated ASX growth shares:

Afterpay Ltd (ASX: APT)

The first ASX growth to look at is Afterpay. This leading buy now pay later (BNPL) focused payments company has been growing at a rapid rate over the last few years. This is thanks to the increasing popularity of the BNPL payment method and its successful international expansion.

The good news is that it still has a very long runway for growth in both existing and new markets. The former includes a $5 trillion opportunity in the United States which is being supported by the launch of its pay anywhere solution. Whereas the latter includes its recent expansion into Europe and its Asia plans.

In addition to this, the upcoming launch of its Money by Afterpay app is expected to be a big boost to its ANZ business. In fact, analysts at Morgan Stanley believe it could help Afterpay double its revenue in Australia.

Overall, the broker believes the company is well-positioned for growth. As a result, this week the broker retained its overweight rating and $145.00 price target on its shares.

TechnologyOne Ltd (ASX: TNE)

Another ASX growth share to look at is TechnologyOne. It is Australia’s largest enterprise software company, providing a global software as a service (SaaS) ERP solution.

Management notes that this integrated enterprise SaaS solution is available on any device, anywhere and anytime and is easy to use. At the last count, over 1,200 leading corporations, government agencies, local councils and universities were powered by its software.

TechnologyOne has been growing its recurring revenues at a strong rate in recent years thanks to the success of this SaaS offering. However, its growth is still only get started. Management is targeting annualised recurring revenue (ARR) of over $500 million by FY 2026. This is more than double its current ARR of $233 million.

Morgans is bullish on the company and believes it could achieve its ARR targets. As a result, the broker has put an add rating and $10.00 price target on its shares.

Should you invest $1,000 in Afterpay right now?

Before you consider Afterpay, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Afterpay wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor 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 has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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