In periods of elevated volatility and market declines, investors may get the chance to buy ASX growth shares that are much cheaper than they were before.
Sometimes a decline can be triggered by external events, such as the prospect of rising interest rates or the recent-ish onset of the COVID-19 global pandemic.
With that in mind, these are two ASX growth shares that are rated as buys:
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Bubs Australia Ltd (ASX: BUB)
Bubs claims to be Australia's number one goat infant formula brand, with a 43.2% market share of the domestic goat segment.
It has also reached a 4.2% market share of the total infant formula market in Australia, with 40% scan sales growth in the third quarter of FY22 for the three months to 31 March 2022. Scan sales refer to the combined sales at Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW), and Chemist Warehouse.
Not only is the company growing sales rapidly domestically, but sales are also increasing internationally. In the FY22 third quarter, international (excluding China) sales represented 32% of total quarterly sales. Quarterly international sales jumped 153% with Bubs-branded product international sales rising 63%.
Quarterly Chinese sales were up 8%, representing 40% of the company's quarterly sales. Daigou sales were up 11% year on year, while cross-border e-commerce sales rose 2%.
The company is working on growing its distribution footprint in the USA. In the quarter, its ranging expanded to 254 Smart & Final stores as well as 130 Buy Buy Baby stores.
The ASX growth share is also increasing its partnership with corporate daigou business Willis Trading. This includes a large purchase order for Bubs' new product called Bubs Supreme.
Bubs is rated as a buy by the broker Citi, with a price target of $0.59. However, it was expecting more revenue growth in the FY22 third quarter. The Bubs share price has fallen more than 10% this week.
The company warned COVID-19 could cause more disruptions in the shorter term.
Adore Beauty Group Ltd (ASX: ABY)
The Adore Beauty share price has fallen by around 60% in the 2022 calendar year to date.
Like plenty of other ASX growth shares, the beauty e-commerce business has seen a decline amid rampant global inflation and expectations of rising interest rates.
However, the company has continued to deliver operational growth. That's one of the things that attracts UBS to the business. The broker rates Adore Beauty as a buy, with a price target of $4.70. UBS thinks that Adore Beauty can keep growing revenue in the coming years.
In its FY22 half-year result, Adore Beauty said that its revenue rose 18% to $113.1 million, with annual revenue per active customer rising by 5% year on year to $224. That was thanks to higher average order values and an increasing proportion of returning customers.
The company boasts of industry-leading customer satisfaction scores while executing "strongly" on longer-term strategic priorities. It's growing its loyalty program with "continued strong member sign-ups". The company is also expanding its owned-marketing channels which means it doesn't need to spend as much to reach potential customers with its marketing.
The ASX growth share is working on initiatives that can help its underlying profit margins. It's planning to launch its first private label skincare brand in the fourth quarter of FY22. The gross profit margin improved by 0.6 percentage points to 33.1% in HY22.
In the first six weeks of the second half of FY22, its revenue increased another 14%. Management says the business is benefiting from a structural shift to online. It says "customer growth, high levels of retention, and growing brand awareness, strongly positions the company for future growth".
