Why Appen (ASX:APX) and this ASX growth share could be buys

These growth shares could be in the buy zone…

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Investors searching for growth shares, may want to look at the shares named below.

These shares have been tipped to grow strongly over the 2020s and are currently named as buys.

Here’s what you need to know about them:

Appen Ltd (ASX: APX)

The first ASX growth share to look at is Appen. It is a leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI).

Through its huge team of skilled contractors, Appen prepares or creates the data for the machine learning models of some of the largest tech companies. This includes the likes of Amazon, Facebook, and Microsoft.

Appen had been growing at an explosive rate year on year until the pandemic hit last year. This led to a reduction in demand for its services from its biggest customers as they held back on major projects.

The good news is that management believes demand will increase again post-pandemic. It has also been making acquisitions to bolster its offering.

In light of this, a very sharp pullback in the Appen share price this year could potentially be a buying opportunity for investors.

The team at Citi appear to believe this is the case. The broker currently has a buy rating and $18.80 price target on its shares.

Xero Limited (ASX: XRO)

Another ASX tech share that has been rated as a buy is Xero. It provides small and medium sized businesses with a cloud-based business and accounting solution.

It has been growing at a consistently solid rate for over a decade and shows no signs of slowing. For example, in FY 2021, the company increased its subscribers by 20% to 2.74 million despite the pandemic.

The good news is that this represents only a 6.1% share of its estimated overall market opportunity of 45 million globally.

Another positive is the company’s plan to monetise its growing user base via its app store. This has the potential to support strong revenue growth for decades according to the team at Goldman Sachs.

It is for this reason that the broker continues to be very bullish on the Xero share price. Its analysts currently have a buy rating and $165.00 price target on its shares.

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 Appen Ltd and Xero. The Motley Fool Australia owns shares of and has recommended Appen Ltd and Xero. 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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