If you're searching for growth shares to buy, then it could be worth considering the two listed below.
Here's why experts are saying that these ASX growth shares are in the buy zone now:
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Readytech Holdings Ltd (ASX: RDY)
The first ASX growth share to look at is Readytech. It owns a portfolio of enterprise software businesses across several market verticals such as higher education and local government.
The team at Goldman Sachs note that these businesses operate in market niches that are under-served by both large and small enterprise software competitors. This has been supportive of growing recurring revenues and very low levels of churn.
Its analysts commented:
In our view, RDY will continue to grow mid-teens organically while making accretive acquisitions (such as IT Vision), with profitability underpinned by solid software metrics including low churn at ~3% and high LTV/CAC.
RDY serves defensive end markets (e.g. higher education, local government) and has high recurring revenue (>85%) which should protect the company's earnings profile in an economic downturn.
Goldman Sachs has a buy rating and $4.60 price target on ReadyTech's shares.
ResMed Inc (ASX: RMD)
Another ASX growth share that has been rated as a buy is ResMed. It is a sleep treatment focused medical device company with an industry-leading portfolio of products.
Citi is a fan of the company and notes that the company has announced plans to expand its growing software business into Europe via the acquisition of Medifox Dan for US$1 billion. It also highlights that ResMed's shares are trading on lower than average multiples, potentially creating a buying opportunity for investors.
Our FY23-24E EPS increases by <1% and Target Price reduces to $34.50 (from $35.50) as a result of incorporating Medifox Dan acquisition into our forecasts. RMD is currently trading at PE of ~28x FY24E, below historical avg of ~32x.
Maintain Buy. This is RMD's third major acquisition in the SaaS segment after Brightree (Apr'16) and MatrixCare (Nov'18). ResMed paid US$800m or ~19x EBITDA for Brightree and ~US$750m or 25x EBITDA for MatrixCare. The Medifox Dan acquisition should allow RMD to expand its SaaS business footprint outside the U.S.
Citi has a buy rating and $34.50 price target on ResMed's shares.
