2 compelling ASX growth shares that are now great value: brokers

Lovisa is one of the ASX growth shares that now look great value.

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Key points

  • The share prices of both Airtasker and Lovisa have fallen in recent weeks. Brokers think they look like attractive buys
  • Global affordable jeweller Lovisa is growing its store network and is expected to achieve growing margins
  • Airtasker is growing its volume quickly, whilst also expanding overseas to the UK and the USA

The recent market plunge has now made some of the most compelling ASX growth shares seem great value, according to some leading brokers.

A fall in the price of companies can make the potential growth on offer more attractive for investors.

With that in mind, these are two ASX shares that now seem like they are even better opportunities:

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a worldwide retailer of affordable jewellery which is targeted at younger shoppers.

This company is liked by several brokers, with one of the latest buy ratings coming from UBS.

The Lovisa share price has fallen by 25% since 19 November 2021. UBS has a price target on the business of $21.25. That’s an implied upside of more than 20% over 2022.

One of the things that the broker appreciates about the ASX growth share is its global network of stores. There are currently around 570 stores in the worldwide Lovisa store network, with 31 stores opened since the end of FY21 and five closures. Within the store opening numbers, it has recently opened two new franchise stores in Cyprus, bringing its geographical coverage to 21 countries.

Some of the places it operates includes: Australia, South Africa, the USA, France, the UK, Germany New Zealand and Singapore.

COVID-19 is currently impacting things like the store rollout as well as global freight costs and capacity. However, scale benefits and COVID effects subsiding can assist the business in 2022.

UBS thinks the current Lovisa share price is valued at 29x FY23’s estimated earnings.

Airtasker Ltd (ASX: ART)

Airtasker has seen its share price severely punished over the last couple of months. In 2022 the Airtasker share price has dropped 28% and in the past three months it has fallen 46%.

The business was hurt by lockdowns in its two main markets of Sydney and Melbourne in the first quarter of FY22 . Despite that, Airtasker was able to achieve gross marketplace volume (GMV) growth of 6.2% in the first quarter.

When the business held its annual general meeting (AGM) in November it said that it had experienced a sharp bounce back, with GMV reaching all-time highs of $3.9 million per week, or approximately $200 million on an annualised run rate basis.

Whilst the ASX growth share may be spending substantial cash to generate growth for the long-term, FY21 showed that the underlying business is/can be cashflow positive after generating $5.5 million of operating cashflow.

The broker Morgans currently rates Airtasker as a buy with a price target of $1.27. That suggests a potential increase of more than 100% over 2022.

Airtasker also said at its AGM that it’s seeing strong positive movement in its average task value. Initially, this was due to the labour shortage with 600,000 temporary visa holders leaving Australia. COVID means it will take some time for the labour shortage to normalise, meaning this trend could continue for the medium and longer-term.

Aussies are also turning to Airtasker for increasingly complex and therefore higher value tasks. This is due to customers trusting Airtasker thanks to a positive first time experience, which is an important growth factor and one that Airtasker is highly focused on.

It’s looking to expand in both the UK and USA, which are much larger markets than Australia due to their larger populations.

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. has recommended Airtasker Limited. The Motley Fool Australia has recommended Lovisa Holdings Ltd. 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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