2 ASX growth shares that experts love right now

Serko is one ASX growth share that brokers currently rate as a buy.

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Key points

  • Brokers have identified some leading ASX growth shares as buys
  • Serko is a business travel ASX share
  • Step One Clothing is a retailer of high-quality innerwear

Experts have revealed some quality ASX growth share picks that they believe are opportunities at the current valuations.

There has been plenty of volatility on the ASX share market in recent months. Lower prices could mean better value for these two growing businesses:

Serko Ltd (ASX: SKO)

Serko describes itself as a leader in online travel booking and expense management for the business travel market.

In terms of how much of a decline it has seen, the Serko share price has fallen by around 40% in the past six months to its current price of $4.28.

It’s currently rated as a buy by a few different brokers, including Citi. The price target is $5.75, implying a potential rise of more than 34% over the next year. The broker believes the partnership with Booking will be a key area of interest in the upcoming report from the ASX growth share.

Citi is expecting Serko’s volume to keep growing as it recovers from the impacts of COVID-19.

In its February 2022 trading conditions update, the company said the Omicron COVID variant had reduced business travel volumes in key markets and the expected revenue for FY22. Booking.com business volumes were “significantly impacted” in December up until mid-January. However, in the week prior to the update, volumes were back to approximately 90% of October 2021 volumes.

The ASX growth share’s revenue for FY22 is now expected to be between NZ$18 million and NZ$20.5 million.

The company is due to hand in its full-year result on 18 May.

Step One Clothing Ltd (ASX: STP)

For readers that haven’t heard of Step One Clothing before, it’s a direct-to-consumer online retailer for ‘innerwear’. It says that it offers an “exclusive range of high-quality, organically grown and certified, sustainable and ethically manufactured innerwear that suits a broad range of body types”.

The Step One Clothing share price has also seen a hefty decline in recent times. Over the last six months, Step One Clothing shares have dropped by around 82% to 48 cents at the time of writing.

It’s currently rated as a buy by the broker Morgans with a price target of $2.40. That implies a potential rise of around 400% over the next year.

The broker likes the expanding product range of the business, with expectations for a good end to FY22, going into FY23. The broker thought the market had been too harsh on this ASX growth share.

In that FY22 half-year result, Step One reported revenue of $38.1 million, which was up 11.7%. Its gross profit margin improved from 82.1% to 83.1%. The company also boasted of “strong” returning customer order rates. Returning customers increased from 39% to 60%.

The company is looking to grow in the UK and the US. It has launched a women’s line and a sports range.

In FY22, Step One is expecting to grow sales by between 21% and 25%, with pro-forma earnings before interest, tax, depreciation, and amortisation (EBTIDA) of $15 million.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Serko Ltd. The Motley Fool Australia has recommended Serko Ltd. 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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