There are some S&P/ASX 200 Index (ASX: XJO) growth shares that could be options to consider for potential long-term capital appreciation.
Not every business is known for growth. Some of the biggest blue chips have a reputation for dividends instead such as Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS).
However, there are also a number of businesses that are growing revenue and/or profit at a fast pace that may be worth considering:
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare is one of the larger healthcare businesses on the ASX with a market capitalisation of $19 billion according to the ASX.
It has large pathology operations and laboratories around the world in Europe, Australia, New Zealand and North America.
COVID-19 testing has led to an increased level of earnings for the business, whilst continuing to provide its usual essential healthcare services. At the time of its FY21 result, approximately 30 million COVID-19 PCR tests had been performed in around 60 laboratories globally. It is also Australia’s largest non-government COVID vaccination provider.
The ASX 200 growth share is able to leverage its existing infrastructure and people to perform all of the tests.
In FY21, total revenue grew 28% to $8.8 billion. After excluding COVID testing, revenue was up 6% on FY20 and 4% compared to FY19. However, the net profit rose much quicker, growing by 149% to $1.3 billion.
Not only is the company growing organically, but it has also been putting some its earned profit to work by making acquisitions. It has moved to majority ownership of the Epworth Medical Imaging business as well as the acquisition of Canberra Imaging Group.
At the current Sonic Healthcare share price, it is valued at 19x FY22’s estimated earnings.
Netwealth Group Ltd (ASX: NWL)
Netwealth is another ASX 200 growth share that is seeing a rapid increase of its revenue.
The fintech business is seeing a high level of adoption as the financial industry continues to move towards Netwealth and a couple of its peers.
FY21 saw the business grow its total income by 16.9% to $144.9 million, whilst net profit jumped 23.9% to $54.1 million.
The FY22 first quarter was another example of the double digit growth that the fintech is creating.
Funds under administration (FUA) was $52 billion at 30 September 2021. That was an increase of 10.2% quarter on quarter and a 52.7% rise year on year.
Looking at the net inflows, the three months to 30 September 2021 saw net inflows of $4 billion, which was an increase of 111% compared to a year ago.
Funds under management (FUM) at 30 September 2021 was $12.6 billion, an increase of 7.7% quarter on quarter and an increase of 56.9% year on year.
In terms of the outlook, Netwealth said that the ongoing structural changes within the financial services industry continues to support and increase Netwealth’s addressable market and growth opportunities. It said its pipeline for new business remains “very strong” across all market segments.
It increased its FY22 FUA net inflow guidance for FY22 from $10 billion to approximately $12.5 billion.
According to Commsec, the Netwealth share price is valued at 60x FY23’s estimated earnings.