There are some quality ASX growth shares that might be worth looking as potential opportunities.
Businesses that are producing earnings growth give it a better chance to make shareholder returns.
Here are two ASX growth shares that might be worth thinking about:
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
This is an exchange-traded fund (ETF) by VanEck. The idea is to create a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.
Those businesses need to be at a good price for the Morningstar analysts’ estimate of fair value. But they must also possess sustainable competitive advantages, or “wide economic moats”. That means the businesses are expected to maintain their competitive position for a number of years (and perhaps beyond).
It has a portfolio of almost 50 positions. These are the positions that have a weighting of more than 2.5%: Servicenow, Microsoft, Tyler Technologies, Alphabet, Amazon.com, Facebook, Guidewire Software, Pfizer, Salesforce.com, Wells Fargo, Cheniere Energy and Medtronic.
All of the businesses are listed in the US, however, the underlying earnings come from many countries. The sectors that have more than 10% of the portfolio includes: health care (20.3%), information technology (16.6%), industrials (15.4%), financials (13.3%) and consumer staples (11.1%).
It has an annual management fee of 0.49%. Over the last five years, it has produced an average return per annum of 19.2%. Past performance is not an indicator of future performance.
Baby Bunting Group Ltd (ASX: BBN)
Baby Bunting might count as an ASX growth share in the baby and toddler retailing space.
It’s currently rated as a buy by several brokers, including Citi which has a price target on Baby Bunting of $6.22.
Citi has pointed out that there are potential issues relating to trading restrictions in a few places at the moment. Despite that, the spending on baby products is pretty essential and there isn’t much competition in the space either.
The FY21 half-year result showed both growth and operating leverage. Total sales grew 16.6% $217.3 million. But that included total online sales growth of 95.9% – which shows customers have multiple ways to access Baby Bunting’s product catalogue, even in lockdowns.
Baby Bunting’s gross profit margin improved 41 basis points to 37.4%. Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) grew faster than sales, by 29.7%, to $18.5 million. The pro forma net profit after tax (NPAT) rose 43.5% to $10.8 million.
The ASX growth share is looking to grow further by expanding into New Zealand, develop a new loyalty program, open more stores, improve its online offering and supply chain efficiencies.
In New Zealand it’s planning to open at least 10 stores. It had 59 stores in Australia a few months ago and has plans for a network of over 100 stores in the country.
According to Citi, the Baby Bunting share price is priced at 22x FY22’s estimated earnings.