Buy these ASX growth shares in May: experts

We check the credentials of two ASX companies that are rated as buys by brokers.

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Key points

  • Macquarie has rated these two ASX growth shares as buys
  • Aristocrat Leisure is a global pokies machine business
  • Hub24 is a financial platform for advisors and clients

There are a number of ASX growth shares that experts currently rate as buys in May 2022.

The analysts at Macquarie have looked at some of the most recent updates from companies that may be compelling at their current prices.

Here are two of those buy-rated companies:

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat Leisure describes itself as a global gaming content and technology company and mobile games publisher with more than 7,000 employees in more than 20 locations. It offers electronic gaming (poker) machines, casino management systems, and free-to-play mobile games.

Its regulated gaming products are approved for use in more than 300 licensed jurisdictions and are available in more than 100 countries.

This ASX growth share recently reported its result for the first six months of FY22. Its ‘normalised’ results showed operating revenue growth of 23.1% to $2.74 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) grew 30.3% to $970.3 million, and net profit after tax (NPAT) increased 46.5% to $530.7 million.

It also grew its interim dividend per share by 73.3% to 26 cents per share.

The company outlined in its outlook that it’s expecting ongoing growth over the rest of the full year. It also said it will keep investing in the business to grow its capabilities and facilitate its ongoing transformation in “scale and velocity”.

Macquarie currently rates it as a buy, with a price target of $44. That implies a possible upside of around 25%. The company noted the strong growth in the result as well as the $500 million on-market share buy-back of up to $500 million.

The broker thinks the Aristocrat Leisure share price is valued at 21 times FY22’s estimated earnings.

Hub24 Ltd (ASX: HUB)

Hub24 is a business that offers the Hub24 platform which gives advisers and their clients a “comprehensive range of investment options, including market-leading managed portfolio solutions, and enhanced transaction and reporting functionality”. After acquisitions, it also owns the Xplore Platform and Class Limited.

Despite volatility, this ASX growth share continues to grow at a quick double-digit rate.

In the quarter for the three months to March 2022, it saw platform net inflows of $2.6 billion – this is an increase of 36.4% year on year. Year-to-date net inflows for the nine months to 31 March 2022 were $9.3 billion.

Total funds under administration (FUA) as at 31 March 2022 was $68.3 billion, including platform FUA of $51 billion (up 43.3%).

Hub24 boasts that it is ranked as first for adviser advocacy by Adviser Ratings. It also said that its ‘value proposition’ continues to resonate with growth in net inflows and a “strong” pipeline of new opportunities across all customer segments including large licensee clients, brokers, boutique advice practices, and self-licensed advisers.

In the latest quarter, the ASX growth share signed 21 new distribution agreements and the total number of advisers using the platform is now 3,432 (up 24.4% year on year).

Hub24’s market share has increased to 4.9%, up from 2.5% a year before.

It’s currently rated as a buy by Macquarie with a price target of $32.60. That implies a potential upside of more than 30%.

According to Macquarie, the Hub24 share price is valued at 54 times FY22’s estimated earnings and 35 times FY23’s estimated earnings.

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 Hub24 Ltd. The Motley Fool Australia has positions in and has recommended Hub24 Ltd. The Motley Fool Australia has recommended Macquarie 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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