ASX growth shares offering substantial upside could be compelling ideas to look at this month, according to investment experts.
Many business valuations are now cheaper this year after heavy declines amid concerns about inflation and interest rates.
A lower price may not necessarily make an ASX share more worthwhile buying, but it could be a good idea to think about investments that are rated as buys right now.
The below two shares are not the most well known, but they are growing at an attractive rate which experts like.
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NextDC Ltd (ASX: NXT)
NextDC describes itself as Asia's most innovative data centre as a service provider. It says it's building the infrastructure platform for the digital economy, "delivering the critical power, security, and connectivity for global cloud computing providers, enterprise, and government".
One of the brokers that rates NextDC as a buy is Macquarie, with a price target of $13.90. That implies a potential rise of more than 30% on the current NextDC share price of $10.36.
The broker thinks NextDC has an attractive addressable market in both metropolitan locations and regional areas.
The NextDC FY22 half-year result was better than what Macquarie had been expecting. NextDC's underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) rose by 29% to $85 million, while earnings before interest and tax (EBIT) jumped 59% to $31.3 million.
The ASX growth share increased its underlying EBITDA guidance range when it released its HY22 result to $163 million to $167 million, up from $160 million to $165 million.
NextDC's CEO and managing director Craig Scroggie said:
NextDC is in an outstanding position to take advantage of current and future customer opportunities and to press its advantage into new regions and edge locations.
Superloop Ltd (ASX: SLC)
Superloop says its purpose is to "enable better internet for Australian homes and businesses, by enabling challenger retail brands (including Superloop and Exetel brands) to take a larger share of the market, leveraging Superloop's infrastructure-on-demand platform".
Its three segments of the market — consumer, business, and wholesale — all leverage the company's investments in physical infrastructure assets that include fibre, subsea cables, and fixed wireless, as well as its software platforms.
Morgans rates the ASX growth share as a buy, with a price target of $1.37. That implies the Superloop share price — currently 69 cents — could double over the next year.
Last month, Superloop announced it was acquiring Acurus, a white label and technology business, allowing Superloop to expand its "white label broadband relationships and profitable growth in its subscriber base".
The Acurus business provides technology services to businesses such as Energy Australia, Wesfarmers Ltd (ASX: WES)'s Officeworks, and Bakers delight. The initial cost for this deal is $15 million.
Superloop also noted the ongoing organic growth of the business.
In the fourth months to 30 April 2022, Superloop said it achieved net subscriber growth of 7,300 in the consumer division, compared to 6,100 in the six months to 31 December 2021.
The ASX growth share also noted that it has 19,300 subscribers on its Connect platform, up from 11,600 at 31 December 2021.
Superloop is expecting to generate EBITDA of between $23 million and $25 million, up from $18.2 million in FY21.
