There are many ways to judge whether to buy an ASX stock, but a classic and reliable metric is earnings growth.
And that's exactly why the team at the Elvest Fund is bullish on three particular ASX shares.
All these stocks are already on the way up, thanks to their earnings trending higher:
Earnings driver #1: A huge takeover
Navigator Global Investments Ltd (ASX: NGI) recently reached a major corporate milestone.
"NGI completed the acquisition of the Strategic Portfolio (3 January) from GP Strategic and provided an assets under management (AUM) update for the quarter ended 31 December," read an Elvest memo to clients.
The deal is a huge boost for its fortunes.
"NGI emerges from the transaction as a larger, more diversified business with a stronger balance sheet and an enhanced partnership with major shareholder, GP Strategic, a leading capital provider to US asset managers.
"The AUM update brought no surprises with Group AUM rising slightly to US$26.1 billion."
Although sparsely covered, NGI shares are rated as strong buy by both the analysts currently surveyed on CMC Invest.
Earnings driver #2: Huge jackpots
You may have heard that last week Powerball jackpotted to a massive $200 million.
These types of headline-grabbing events are a boon for lottery services providers, such as Jumbo Interactive Ltd (ASX: JIN).
"This should aid customer acquisition, online engagement and FY24 profitability."
The future looks bright for Jumbo Interactive, according to the Elvest memo.
"Looking ahead, specifically to FY25 and beyond, we forecast improving operating leverage as further increases in online penetration, lottery ticket price rises and flat Lottery Corporation Ltd (ASX: TLC) fees all combine to generate strong growth in Australian earnings."
The company also has a nice side hustle going overseas.
"Equally as promising is Jumbo Interactive's sharpened global expansion strategy, this time as a software vendor, rather than a retailer, in offshore markets."
Earnings driver #3: Huge disasters
The arrival of El Nino late last year was meant to put an end to the flooding disasters Australia suffered over the preceding years, but this summer the calamity has continued.
As a disaster insurance claims repairer, the Elvest team noted how the Johns Lyng Group Ltd (ASX: JLG) share price rose in January.
"Johns Lyng rallied in anticipation of further growth in their contracted catastrophe (CAT) work-in-hand, reflecting the recent spate of disaster events in eastern Australia."
But the company is not just relying on random natural events for earnings. It has other activities going on that are under their own control, such as strata work and overseas expansion.
"The business remains well positioned to grow its business as usual (BAU) earnings in both Australia and the US, and we see an upgrade to full year earnings forecasts at the 1H24 result as a possibility."
