If you have a penchant for ASX 200 growth shares like I do, then you may want to check out the stocks listed below.
They are quality companies with strong growth outlooks and, importantly, have been named as buys by brokers. Here's what you need to know about these stocks:
Life360 Inc (ASX: 360)
The team at Bell Potter continues to rate this location technology company as an ASX 200 growth share to buy.
It was blown away by Life360's recent quarterly update and appears to believe its strong form can continue for some time to come. It explains:
On the back of the strong result and guidance upgrade we have increased the multiple we apply in the EV/Revenue valuation from 6.0x to 6.25x and reduced the WACC we apply in the DCF from 9.3% to 9.1%. This combined with the changes in our forecasts has resulted in an 8% increase in our PT to $20.50 which is >15% premium to the share price so we maintain our BUY recommendation. Potential catalysts include the Q3 result in November – typically the strongest quarter for paying circle growth – and a step up in advertising revenue in both Q3 and Q4. Increased clarity around the new Placer.ai deal could also be a positive as well as early success for Hubble.
In response to the results, the broker has reaffirmed its buy rating with an improved price target of $20.50.
REA Group Ltd (ASX: REA)
Another ASX 200 growth share that has been named as a buy this week is REA Group. It is the property listings company behind the leading realestate.com.au website.
Goldman Sachs is very positive on the company and believes it would be a great option for investors right now. Particularly given its very attractive risk/reward profile. It explains:
We believe REA Group, a leading real estate classified business with strong market positions across Australia, Asia and the United States, has one of the best risk/reward profiles in our domestic media coverage. In particular, we are positive on the pricing power of the real estate classified vertical, given that we believe budgets will rise (at the expense of commissions), and within existing budgets, REA, as a leading player in the vertical, under-monetises its lead generation. We also see the current negative sentiment around AU property as more a driver of share prices over earnings.
We believe REA is among the highest-quality names in our coverage, given it has the highest ability to continue to drive pricing, with: (1) significant disparity between lead share and revenue share; (2) the lowest cost relative to overall vertical transaction; (3) a profitable and still fragmented end market; and (4) the existence of Vendor Paid advertising, with strong valuation support with current trading multiples in-line with historical levels. We are therefore Buy rated on REA.
Goldman has a buy rating and $221.00 price target on the ASX growth share.
