Where I'd invest $10,000 in ASX growth shares right now

These are my top picks for growth.

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ASX growth shares can deliver strong returns because they can compound earnings for many years. In this article, I'll discuss three companies I like for their growth potential.

If I were given $10,000 to invest evenly across three growing investments, I know which ones I'd buy right now because of the current prices and how much I think they can grow their underlying earnings.

Let's get stuck into where I see exciting potential.

Johns Lyng Group Ltd (ASX: JLG)

Johns Lyng prides itself on its ability to rebuild and restore properties and contents after insured events, including storms, floods, and fires.

It has a growing catastrophe response segment that is expanding in Australia and the United States. The more damaging, expensive storms there are, the more work Johns Lyng could potentially do.

The business continues to see solid double-digit core earnings growth. In the FY24 first-half result, it revealed that its normalised business as usual (BAU) net profit after tax (NPAT) grew 15.8% to $25 million.

I'm excited by the company's ability to expand overseas. It is already doing well in the US (which is a huge market), and the ASX growth share recently entered New Zealand. If it can grow into other countries successfully, that would expand its growth runway even further. I also like its growing exposure to strata services.  

According to the estimates on Commsec, the Johns Lyng share price is valued at 27x FY25's estimated earnings.

Frontier Digital Ventures Ltd (ASX: FDV)

This ASX tech share invests in 'classifieds' websites in emerging markets in Asia, South America, the Middle East, and Africa. Its three main types of websites are motor, property, and general marketplaces.

These sorts of businesses are very scalable – once the main infrastructure has been created, additional volume can help rapidly grow profit margins.  

The ASX growth share is profitable and it's growing revenue. In 2023, statutory revenue rose 15% to $67.9 million, statutory earnings before interest, tax, depreciation and amortisation (EBITDA) grew $8.3 million to $3.7 million, and the 2023 second half saw $1.3 million of NPAT (up from a $9.9 million loss in the 2023 first half).

One of the most compelling things about these markets is that some people are only just signing onto the internet – in 2023, internet penetration increased to 68%, up from 62% in 2022. There is a lot of digital adoption still to happen.

I think this ASX growth share can grow profit significantly over the next decade if the underlying businesses see more users.

Betashares Global Cybersecurity ETF (ASX: HACK)

This exchange-traded fund (ETF) gives Aussies exposure to the compelling industry of cybersecurity. More people globally are going online and conducting more activities digitally, such as shopping, banking, working, communicating and so on.

Cybersecurity is vitally important to prevent cybercriminals from stealing personal data, bank card details, important business intellectual property, login details and so on.

A number of Australian businesses have been hacked in recent history, including Optus, Medibank Private Ltd (ASX: MPL), Latitude Group Holdings Ltd (ASX: LFS) and IPH Ltd (ASX: IPH). Companies and governments need to ensure they have the best defences.

There isn't much direct cybersecurity exposure on the ASX with Aussie companies, but the HACK ETF enables exposure to a portfolio of names like Cisco Systems, Broadcom, Broadcom, Crowdstrike, Infosys and Palo Alto Networks without having to leave the ASX.

Past performance is not a guarantee of future returns, but the HACK ETF has returned an average of 16.7% per annum over the past three years.

Motley Fool contributor Tristan Harrison has positions in Johns Lyng Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Global Cybersecurity ETF, Frontier Digital Ventures, and Johns Lyng Group. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended Frontier Digital Ventures, IPH, and Johns Lyng Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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