Near its 52-week low, this ASX growth stock could be the bargain of the year!

I think this stock could be a leading opportunity.

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The Corporate Travel Management Ltd (ASX: CTD) share price has fallen to a 52-week low, as we can see on the chart below. It's also down 32% since the start of 2024.

The ASX travel share has lost investor confidence after the FY24 first-half result wasn't as strong as some investors were hoping.

Corporate Travel Management said macro issues beyond the control of the business impacted performance in the second quarter of 2024. That included negative travel sentiment relating to conflict in the Middle East, American client calendar-year travel budgets being fully utilised by the end of the FY24 first quarter due to "unsustainably high ticket prices" and a slower Chinese outbound recovery.

These issues affected FY24's second-quarter earnings before interest, tax, depreciation, and amortisation (EBITDA) by approximately $15 million.

It also said the UK bridging contract is "materially underperforming" compared to the client's initial expectations because of immigration challenges and timing delays. This is expected to have a $25 million impact to the full-year result.

But the ASX growth stock could have a very promising outlook for the rest of the decade.

Why the Corporate Travel Management share price could be undervalued

For starters, the business said the macro issues in the second quarter "appear to have dissipated, with the group experiencing a strong rebound in January 2024." These issues are "unlikely to impact 2H24".

The company has a five-year growth strategy to double its FY24 profit organically by FY29, which would represent a compound annual growth rate (CAGR) of 15%, with any acquisitions adding to the growth.

Firstly, the company is aiming to grow its revenue by at least 10% per annum over five years by winning new clients. The new win target starts at $1 billion per annum and will increase to $1.6 billion per annum by FY29.

Second, the ASX growth stock wants to keep its client retention rate of 97% each year. The company is expecting client activity will grow by 3% per annum, offsetting any client losses.

Third, it's hoping that its key projects will achieve revenue gains and savings over time, with a target of costs to only grow by 5% per annum. Revenue per full-time employee improvement will be a key performance measure of progress. Future projects are aimed at both market share growth and automation.

Fourth, Corporate Travel wants 50% of every new dollar of revenue to fall to the EBITDA profit line as it wins new clients, retains existing clients and implements the above-mentioned cost projects. This can translate into the EBITDA growing at a CAGR of 15% over five years.

Finally, any acquisitions are in addition to the above plans. Most acquisition targets are "highly leveraged with debt to survive COVID". The ASX travel share is "actively pursuing" these opportunities, which will add "further growth, shareholder value and economies of scale."

If the company executes its plans well and doubles its profit in the next five years, I think it could be a great market-beater, as long as technology and AI don't negatively disrupt the travel industry.

ASX growth stock valuation

According to the estimates on Commsec, the ASX growth stock is valued at 16x FY24's estimated earnings and just 12x FY26's estimated earnings.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management. The Motley Fool Australia has positions in and has recommended Corporate Travel Management. 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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