Nvidia has gone on an incredible run, up more than 210% this year and around 300% from mid-October. There aren't many shares that have made those sorts of returns in less than a year, let alone by a business that's now worth over US$1 trillion.
There's a lot of hype surrounding artificial intelligence (AI), and while Nvidia seems on course to benefit from the large demand, its current valuation has a lot of growth factored into the market capitalisation.
I believe the two ASX growth shares that I'm going to write about are more compelling and don't have global attention.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara describes itself as a business that makes software to save families from cancer. The technology is used to "better understand cancer risk, empower patients in personal care decision, improve and maintain quality, and guide recommendations about additional imaging, genetic testing, and other interventions."
The idea is that AI-powered image analysis enables radiologists to quantify breast tissue with precision. Volpara notes that one of its selling points is that in an industry facing increasing staff shortages, its software helps streamline operations.
Since February 2021, the Volpara share price has fallen over 50%, yet the ASX growth share has made a lot of progress. In FY23, it generated 34% revenue growth to NZ$35 million, while gross profit increased 36% to NZ$32.4 million. This implies a very high gross profit margin, which I love to see for businesses that are growing revenue.
When a business has a high gross profit margin it means that a lot of the new revenue can turn into usable profit and then be used for more growth or to increase the profit margin. Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) improved by 57% to a loss of NZ$6.1 million.
I think there is a lot of potential for the business to grow revenue with more of its software being utilised by healthcare professionals and geographic expansion in places like Europe.
Johns Lyng Group Ltd (ASX: JLG)
Johns Lyng describes itself as an integrated building service, specialising in rebuilding and restoring a variety of properties and contents after damage by insured events, including impact, weather and fire events.
There seems to be a disappointing trend that there are more damaging and expensive weather events, which can be a tailwind for the level of the company's work and earnings.
FY23 saw the ASX growth share's total revenue rise 43.2% to $1.28 billion, while overall net profit after tax (NPAT) jumped 64.3%. The catastrophe-related segment saw revenue soar 125.3% to $371.3 million.
In FY24, the company is expecting its 'business as usual' revenue to increase by another 18.5%, while the 'business as usual' EBITDA is predicted to increase by 20.1% to $113 million.
I like that the business is looking to grow in different areas as well, including its move into strata/body corporate services, as well as 'essential home services', such as smoke alarm, electrical, gas compliance, testing and maintenance services. There are a lot of revenue synergies that could be created between Johns Lyng's businesses, as well as providing plenty of acquisition opportunities.
According to Commsec, the Johns Lyng share price is valued at 26 times FY25's estimated earnings.