I love finding ASX growth shares that have a compelling future with good potential earnings growth.
I want to invest in businesses that can deliver appealing compounding of their profit. The longer the growth runway, the better.
Companies with a track record of growing operationally have shown they can be successful. They just need to keep going. I think a $10,000 investment in the two stocks below could beat the market. Here's why.
Premier Investments Limited (ASX: PMV)
The Premier Investments share price has dropped more than 10% since 3 September, so I think this could be a good time to jump on the ASX retail stock.
Firstly, I like investing in good companies at lower prices. This company owns the Smiggle and Peter Alexander businesses, as well as other apparel brands and large stakes in ASX shares Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR). It has a good portfolio, in my opinion.
Second, Premier Investments is working on combining its apparel businesses (excluding Peter Alexander) with Myer, which could make a compelling combination. The remaining businesses would mean Premier Investments is of even higher quality overall, in my opinion.
Third, I like this business's global expansion prospects. It wants to grow Peter Alexander and Smiggle earnings overseas, which highlights the large total addressable market (TAM). Premier Investments plans to open multiple Peter Alexander stores in the United Kingdom over the next year, which is exciting because the population is much larger than Australia's.
Finally, the valuation is appealing to me because of how much international growth potential it has. According to the forecast on Commsec, the Premier Investments share price is valued at 22x FY25's estimated earnings.
Tuas Ltd (ASX: TUA)
It's rare to find an ASX share that's fairly early on with its growth journey.
Tuas is a Singapore telco that was spun out of TPG Telecom Ltd (ASX: TPG), and it already has reached 1 million subscribers in the city-state, and I think it has plenty of growth to go.
For starters, thanks to its low subscription prices, it could continue growing its mobile subscribers in Singapore at a strong rate in percentage terms.
The company may be able to grow its average revenue per user (ARPU) at a low single-digit rate, which could accelerate overall revenue growth and help offset any cost inflation in the next few years.
I'm also excited because Tuas is working on growing its presence in the broadband market. It only had 4,000 subscribers at the end of FY24, but the company notes there is strong consumer interest. Remember, it already has a customer base of 1 million mobile users it could potentially market to.
Pleasingly, the ASX share is demonstrating an ability to grow its profit margins. In FY24, its operating profit (EBITDA) margin improved from 36% to 42%.
There are a number of exciting markets surrounding Singapore that Tuas could expand into, such as Indonesia, Malaysia, and Thailand, which have much larger populations.
