2 under-the-radar ASX growth shares I just bought for my investment portfolio

I believe these ASX stocks can provide tasty returns.

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ASX growth shares can provide solid shareholder returns if they are able to keep growing their underlying earnings at a good pace.

Compounding is a very powerful force that can turn today's profit into a much bigger number in five or ten years from now.

Everyone already knows about some of the biggest ASX growth shares like WiseTech Global Ltd (ASX: WTC) and REA Group Ltd (ASX: REA). I'm looking for the next winners, and I think I've just invested in two of them.

Collins Foods Ltd (ASX: CKF)

Collins Foods is a large operator of KFC outlets in Australia, Germany and the Netherlands. It's also growing the Taco Bell business in Australia.

While it doesn't own the KFC or Taco Bell brands, it can still make a lot of money from them by operating profitable stores and opening new stores or acquiring KFCs.

In the first half of FY24, Collins Foods opened four new KFC locations in Australia and eight in the Netherlands. Since the Australian population is only a fraction of the combined population of Germany and the Netherlands, there's plenty more room for Collins Foods to grow its network in Europe.

There are only 27 Taco Bells in Australia at the last count, so I'd imagine there's easily room to add another 100 to the count in this country.

The ASX growth share is also "monitoring the broader European landscape for acquisition and development opportunities", so it might operate in other countries in the future.

The HY24 result showed good revenue and profit growth. Revenue rose 14.3%, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 16.7%, and underlying net profit went up 28.7%.

The current Commsec forecast suggests profit could rise 50% between FY24 and FY26, putting the Collins Foods share price at just 13x FY26's estimated earnings.

Johns Lyng Group Ltd (ASX: JLG)

Johns Lyng specialises in repairing and restoring buildings and contents after insured damage by storms, flooding, fire and so on.

The company is seeing ongoing growth in its core business. In the FY24 first-half result, the company saw its business as usual (BAU) normalised net profit after tax grow by 15.8%.

I think this is a good time to buy shares in the business after its catastrophe work saw a lull in that division's earnings. The ASX growth share said, "Although inherently unpredictable, workflows stemming from CAT events continue to exhibit larger and more enduring characteristics".

I'm also keeping an eye on the company's efforts to expand into other countries. It has made great progress in the United States and is now expanding in New Zealand as well. This significantly boosts the growth runway.

The company is also working on buying strata management services and recently bought two businesses that offer electrical, fire, and smoke testing and compliance. There are many synergies between these businesses and the core repair work.

According to Commsec, the Johns Lyng share price is valued at 22x FY26's estimated earnings.

Motley Fool contributor Tristan Harrison has positions in Collins Foods and Johns Lyng Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group, REA Group, and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Collins Foods, Johns Lyng Group, and REA 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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