The share market has historically generated an average total return of 10% per annum.
While this is a great return, if you look hard enough you might find some ASX growth shares with the potential to outperform materially.
Let's take a look at a couple of shares that have been tipped to smash the market:
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Life360 Inc (ASX: 360)
This location technology company's shares have been on fire this year. So much so, the ASX growth share has doubled in value year to date.
Despite this, a number of analysts believe that Life360's shares still have the potential to deliver market-beating returns over the next 12 months, even if buying at current levels.
One of those brokers is Bell Potter, which currently has a buy rating and $17.75 price target on its shares. This implies potential upside of 18% for investors between now and this time next year.
Bell Potter believes the ASX growth share has the potential to rerate to higher multiples thanks to its strong growth and the valuations of peers. It said:
We have increased the multiple we apply in the EV/Revenue valuation from 5.5x to 6.5x given the proposed US listing and potential re-rating of the stock given the higher multiples of comps like Reddit (NYSE: RDDT). There is, however, no change in the 9.3% WACC we apply in the DCF. The net result is a 9% increase in our PT to $17.75 which is >15% premium to the share price so we maintain our BUY recommendation. Key potential catalysts for the stock include another strong quarter of paying circle growth in Q2 (April was another good month), a potential upgrade to the 2024 guidance sometime in H2 and a US listing at some stage in the next 12 months.
Tyro Payments Ltd (ASX: TYR)
Another ASX growth share that could deliver market-beating returns according to analysts is Tyro Payments.
It is a growing payments provider with around 70,000 merchants on its network. This makes it Australia's fifth largest merchant acquiring bank by number of terminals in the market, behind only the big four banks.
Morgans is a fan of the company and has an add rating and $1.47 price target on its shares. This suggests potential upside of 69% for investors over the next 12 months. The broker commented:
TYR sold off heavily in 2023 affected by the broad pull back in technology stocks and overall concerns regarding its earnings trajectory. However, we believe FY24 will show significantly improved business momentum, importantly driven by a much greater focus on lifting overall profitability. TYR still trades at a significant discount to valuation.
