The S&P/ASX 200 Index (ASX: XJO) growth shares I'm going to cover in this article have seen plenty of volatility since interest rates began ramping up last year.
I think it's understandable that some asset prices have been hit. Higher interest rates lead to stronger returns from 'safe' assets like term deposits, making riskier assets like shares worth a bit less than they used to be.
But, those businesses are still the same companies they were a year ago. I think it just means we can buy them at better value now. With that in mind, these are the three ASX 200 growth shares I'd pounce on right now.
Xero Limited (ASX: XRO)
Xero is one of the world leaders when it comes to cloud accounting software, in my opinion. It has a very strong position in Australia and New Zealand, it's growing strongly in the UK, and it has ambitions in a number of other countries including the US, Canada, South Africa, and Singapore.
I think that some investors are underestimating how profitable Xero is because it's spending most of its revenue growth on further growth activities like marketing and product development.
When I look at some of the numbers, I really like what I see. In the FY23 first half, the gross profit margin was 87%, operating revenue increased by 30% to $658.5 million, and the average revenue per user (ARPU) increased by 13% to $35.30.
With the Xero share price down 45% since the end of 2021, I think it's now at a great price to invest in for the long term.
Johns Lyng Group Ltd (ASX: JLG)
Johns Lyng describes itself as an integrated building services business. Its core business is rebuilding and restoring properties and contents after damage through insured events such as impact, weather, and fire.
Customers include major insurance companies, businesses, local and state governments, owners' corporations, and retail customers.
I think this business is exposed to strong tailwinds, particularly climate change. The more unfortunate weather events there are, the more activity there is for Johns Lyng to help with.
In the company's FY23 half-year result, it upgraded its guidance for the rest of the financial year.
It noted that its earnings were being upgraded because of "strong earnings growth" for both its business-as-usual (BaU) work as well as catastrophe work. HY23 earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 63%. The dividend was increased by 66.7%.
The ASX 200 growth share said that the trend of workflows from catastrophe events is "larger and longer lived". Work from previous events is carrying over into the current financial year. As such, it's seeing a "more sustainable earnings profile" for that division, though this is tied to unpredictable events.
The Johns Lyng share price is down more than 30% since April 2022.
Lovisa Holdings Ltd (ASX: LOV)
I think Lovisa is one of the ASX-listed businesses that has a strong chance of being a global growth contender.
The ASX 200 growth share sells affordable jewellery to younger shoppers. But what I like about the business is that it's expanding its retail store portfolio across the world.
In the second half of FY22, it had 586 stores. A year later this figure had grown to 715. It's growing its presence in places such as Australia, New Zealand, Malaysia, Hong Kong, the UK, South Africa, France, Germany, Italy, Poland, the US, and Mexico. The business is also looking to grow its digital sales and capabilities as well.
It's looking to continue its global rollout in both existing and new markets.
The business reported HY23 net profit after tax (NPAT) growth of 31.9%, with a slight increase in the dividend. Not bad for a business spending a lot of cash on growth.
Commsec numbers suggest the Lovisa share price is valued at just 20 times FY25's estimated earnings. I think it could grow strongly over the rest of the decade, combined with a decent dividend as well.
