Growth investors certainly are spoilt for choice on the Australian share market. But which ASX growth shares should you buy over others?
Three that are highly rated right now are named below. Here's why analysts are tipping them as buys:
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Aristocrat Leisure Limited (ASX: ALL)
The first ASX growth share to buy could be Aristocrat Leisure. It is one of the world's leading gaming technology companies.
Morgans is very positive on the company and has an add rating and $43.00 price target on its shares. It believes the company's is well-placed for long term growth potential. The broker commented:
We're optimistic about ALL's long-term growth potential, given its superior capitalisation and strong ability to invest in the development of its land-based and digital gaming businesses. Additionally, ALL has a high cash conversion rate and ROCE, despite running a capital-light model. Additionally, ALL has ample funding for investment in online RMG, even following the recent buyback extension.
Temple & Webster Group Ltd (ASX: TPW)
Another ASX growth share that could be a buy is Temple & Webster. It is Australia's leading pureplay online furniture and homewares retailer.
Goldman is very bullish on the company and has a buy rating and $6.50 price target on its shares.
It believes Temple & Webster is well-positioned for long-term growth thanks to its strong position in a category that is still in the early stages of shifting online. It commented:
Our Buy thesis is predicated on the following key drivers: (1) we believe TPW is well positioned in the upcoming cycle to continue to grow market share, despite a weaker macro environment; (2) in our view TPW is best placed to be a winner in a category that favours scale players, requires a specialised approach to e-commerce, and has higher barriers to entry vs. other retail categories; and (3) greater focus on costs is a sensible strategy to balance near-term profitability with growth.
Xero Limited (ASX: XRO)
Analysts at Citi are bullish on this cloud accounting platform provider and believe it could be an ASX growth share to buy. The broker has a buy rating and $105.70 price target on its shares.
Citi was pleased with the company's decision to cut costs and is now forecasting very strong earnings growth in the coming years. It commented:
Xero's decision to reduce ~15% of its headcount is unsurprising given: i) revenue/EBITDA per headcount has been limited (~1%) over the last two years; and ii) when considering that growth is expected to slow next year due to delays to MTD as well as softer macro conditions. We maintain our Buy rating as we expect Xero to deliver 3-year EBITDA CAGR >35% which reflects revenue growth of ~19%
