2 ASX growth shares that could be buys in May 2022

These two ASX growth shares may be opportunities to look at this month

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Key points

  • These two ASX growth shares may be leading opportunities in May 2022
  • Adore Beauty is an e-commerce beauty product retailer
  • IDP Education is a student placement and English language testing company

This month may be an opportune time to look for ASX growth shares amid all of the volatility that the ASX share market is seeing.

Businesses that are growing their revenue and profit margins may be candidates to consider.

Here are two that are growing quickly:

Adore Beauty Group Ltd (ASX: ABY)

Adore Beauty is an e-commerce platform that sells a wide array of beauty products.

Since the start of the 2022 calendar year, the Adore Beauty share price has fallen by around 60%.

That decline has happened despite the ongoing scaling of the ASX growth share.

The business recently announced its performance in the three months to 31 March 2022. It said that revenue increased 9% year on year to $42.7 million, while active customers rose 7% to 880,000. Returning customers rose by 47%.

The company has been focused on strategic initiatives that improve customer retention like its mobile app, growing its loyalty program, and its owned-marketing channels like podcasts.

Adore Beauty says the market it operates in is a large and growing $11 billion market. It’s planning to try to capture more of that with its own private label brand which it’s launching in the last quarter of FY22.

In the first half of FY22, the ASX growth share managed to grow its gross profit margin by 0.6 percentage points to 33.1%.

Idp Education Ltd (ASX: IEL)

IDP is an education and English language testing business.

In the first half of FY22, it generated $256.7 million of English language testing revenue, an increase of 62% year on year. It also generated student placement revenue of $106.2 million, an increase of 36%. HY22 total revenue increased 49% as the business recovered from the impacts of COVID-19.

It said that total India English language testing volumes were up 97% year on year and up 13% compared to the first half of FY20, which was before COVID-19. Management points to India which has “supportive long-term demographics, wealth and global mobility fundamentals”.

The company’s increasing profit margins helped its bottom line grow quicker than revenue. IDP Education’s net profit after tax (NPAT) rose 70% in the first six months of FY22.

Management said the ASX growth share is positioned strongly in the rebound from COVID-19. It said it delivered smarter and increasingly personalised ways to guide people in their study, career, and migration.

It said that in the first half of FY22, it “embedded transformative solutions” and its footprint is expanding in key markets. The company has invested for long-term growth, which management said is helping increase demand for its services.

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 positions in and has recommended Idp Education Pty Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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