3 ASX shares I think are primed to break out in 2023

A strong year could be in store for these three names.

| More on:
A couple smile as they look at a pregnancy test.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Healthia is a quickly-growing allied health business that is using acquisitions to expand
  • Monash IVF is a leading fertility business that has significant growth plans in Asia
  • Volpara is an advanced breast screening software business, which has a market share of around 40% in the US

There has been a lot of damage done to a wide range of ASX shares. But, 2023 could be the year that some names surge higher if things go well.

ASX shares that are hoping to grow substantially in the coming years could get some traction next year.

Of course, just because a business is growing doesn't necessarily mean that investors are going to recognise that potential within a 12-month time period, but I think underlying growth of the ASX share can indicate good things for the potential shareholder returns. That's why I've got my eyes on these three ideas:

Healthia Ltd (ASX: HLA)

Healthia is a small-cap ASX share with over 300 clinics. This healthcare share has three segments that are aimed at helping people across 'bodies and minds', 'feet and ankles' and 'eyes and ears'.

I think that, over time, scale can greatly add to this business' profitability as it grows the number of clinics through acquisitions and organic growth.

If the business can execute a steady pipeline of bolt-on acquisitions, it will naturally become a larger business over time.

The business already has a small presence in markets outside of Australia, in New Zealand and the USA, which gives it a longer growth runway.

According to Commsec, the business is valued at just 10 times FY23's estimated earnings with a potential grossed-up dividend yield of 5.7%.

Monash IVF Group Ltd (ASX: MVF)

This ASX share is about providing IVF services to help families have children. The company says that the maternal birth age has increased by two years over the last 20 years and is expected to further increase.

The IVF industry saw a 5% compound annual growth rate (CAGR) of volume between FY17 to FY22. After a disrupted period of COVID, 2023 could be a good year. It managed to slightly increase its market share in FY22.

It's gaining "momentum" in south east Asia with five IVF clinics across the region. It is planning to open two or three new clinics each year. By FY26, Asia could be contributing 25% of the group's stimulated cycles.

FY23 has started strongly – market share was up another 1.4% to 23.8%. According to Commsec numbers, it's priced at under 16 times FY23's estimated earnings.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a leading provider of software relating to screening for breast cancer and lung cancer.

It has built an impressive market share in the US. Of the women that are screened for breast cancer, at least one of Volpara's products is used on 40.5% of women's images.

The ASX share has an impressive gross profit of more than 90%, so extra revenue can help it power towards profitability. Its FY23 first-half result showed total revenue growth of 22% in constant currency terms.

I think a big step towards breakeven in 2023 will go some distance to quell investor concerns about potentially needing to do a capital raising.

Growth of average revenue per user (ARPU), geographic expansion and large client wins could be good tailwinds for the Volpara share price next year.

The US Food and Drug Administration (FDA) is expected to release breast density legislation, which could also be a boost for Volpara if it means more dialogue with patients about cancer risk.

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 Healthia. The Motley Fool Australia has recommended Healthia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Small Cap Shares

Three young people in business attire sit around a desk and discuss.

3 reasons why I'd buy small-cap shares over ASX blue chips in 2024

I’m excited by the potential of small stocks.

Read more »

three children wearing superhero costumes, complete with masks, pose with hands on hips wearing capes and sneakers on a running track.
Small Cap Shares

3 'attractive' small-cap ASX shares ready to rocket in 2024

They ended 2023 with a bang, but the gurus at IML reckon the smaller ASX businesses have more catching up…

Read more »

A couple stares at the tv in shock, one holding the remote up ready to press.
Small Cap Shares

Why Bell Potter says these ASX small cap shares are buys

The broker has only good things to say about these stocks.

Read more »

Two kids in superhero capes.
Small Cap Shares

'Substantial returns over years ahead': 2 ASX small caps starting 2024 with a bang

Smaller companies have struggled over the past two years compared to their larger rivals, but this year could see the…

Read more »

The Two little girls smiling upside down on a bed.
Small Cap Shares

2 small-cap ASX shares licking their lips over interest rate cuts

Celeste Funds names a pair of finance stocks that could be in for a winning 2024 as consumer and business…

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Small Cap Shares

2 small cap ASX shares to buy for 20% to 50% returns

Bell Potter is tipping these small caps to rise strongly from current levels.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Small Cap Shares

Morgans names 7 small-cap ASX shares to buy for earnings season

Here are a number of small caps that the broker has given the thumbs up to this week.

Read more »

Five young boys wearing small caps sit on a bench together watching a baseball game.
How to invest

5 critical factors to consider before buying small-cap ASX stocks

We look at what every investor should consider before buying smaller ASX shares.

Read more »