Are these 2 impressive ASX shares buys for 2022?

ELMO Software is one of the potential options for 2022.

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The next year is almost here. There are some impressive ASX shares to consider for 2022 which experts have rated as buys.

Businesses which are growing quickly have the ability to achieve attractive compound growth over a number of years.

Bubs Australia Ltd (ASX: BUB)

Bubs is a leading goat milk infant formula business, but the Bubs share price has dropped by 24% this year.

The business is rated as a buy by the broker Citi, with a price target of $0.58. That suggests a potential rise of the share price of just over 25% in the next year, if the broker is right.

Citi notes the recovery that Bubs is seeing, particularly when it comes to the daigou channel. The broker also thinks that the ASX share can also expand its addressable market.

Bubs gave investors an insight into potential performance in 2022 with its FY22 first quarter update. Total gross revenue nearly doubled to $18.5 million, whilst Bubs infant formula daigou sales increased 648% year on year.

The ASX share is also making progress internationally. For the first three months of FY22, international (excluding China) gross revenue increased 489% year on year, contributing 24% of quarterly sales. Export sales of Bubs infant formula to markets outside of China grew 154%.

Bubs has signalled its expanding global strategy by establishing entities in New Zealand, China and the USA.

Looking at the product categories, the infant nutrition portfolio – which has higher margins than the adult goat dairy portfolio – saw growth of 89%. The infant formula gross revenue grew 124% year on year and 64% quarter on quarter.

Bubs management say that they are confident on its vision to take Bubs to a global stage.

ELMO Software Ltd (ASX: ELO)

ELMO Software is a leading HR and payroll tech company. It has a substantial presence in both Australia and the UK.

It’s currently rated as a buy by the broker Morgan Stanley with a price target of $7.80. This would be a rise of more than 50%, if the broker’s prediction ends up being right.

ELMO Software is steadily adding more modules for its small and medium clients to utilise. This can increase revenue made from the client, and make the ELMO software even more valuable to the client (and make them more ‘sticky’).

The broker thinks the ASX share can benefit from a number of tailwinds, such as more companies utilising digital tools and software.

In the first three months of FY22, revenue increased 52% to $20.7 million and annualised recurring revenue (ARR) surged 61% to $88.5 million. Cash receipts went up 78% to $27.7 million whilst the business had $75.7 million of cash on hand. The company becoming cashflow neutral/positive could help investor thoughts on the business, according to the broker.

Extending ELMO’s module suite, it recently launched ‘Experiences’ for improve employee engagement and ‘COVIDsecure’ for things like recording, monitoring and reporting COVID vaccination and test status.

Should you invest $1,000 in ELMO Software right now?

Before you consider ELMO Software, 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 ELMO Software wasn't one of them.

The online investing service he’s run for over 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 January 13th 2022

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Elmo Software. The Motley Fool Australia owns and has recommended Elmo Software. The Motley Fool Australia has recommended BUBS AUST 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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