The intrigue of ASX growth shares enthrals many investors. Often, stocks in this category catch headlines and see their shares bid up to high prices.
Qualifying these companies for 'growth' is the growth in their historical and future sales or profits.
Two companies stand out in the growth domain with projected growth in profits and share prices over the coming years. These are Neuren Pharmaceuticals Ltd (ASX: NEU) and Flight Centre Travel Group Ltd (ASX: FLT).
In my view – and the view of several experts – these names stand out as potential winners this month for those seeking exposure to ASX growth shares. Let's take a closer look.
ASX growth shares in favour
First on the list of ASX growth shares is Neuren Pharmaceuticals. It specialises in developing treatments for neurological disorders, and its innovative pipeline has captured significant attention from investors.
The company's NNZ-2591 candidate, aimed at treating Phelan-McDermid syndrome, has been the focus of several brokers.
Bell Potter believes this product could be the accelerant to the fire of Neuren's earnings growth and maintains a buy rating with a $25 price target.
This implies a potential 101% upside from its closing price on Thursday.
Neuren management also anticipates receiving up to $150 million in milestone payments by the first quarter of 2025, which is more than 8.5% of its current market value.
The cash injection positions Neuren to fund its pipeline, which includes Phase 3 trials – the final stages before drug commercialisation.
According to CommSec, consensus expects Neuren to earn 58 cents per share in 2024. Estimates show this could stretch up to 88 cents per share, or 52% growth the following year. In my view, this qualifies Neuren as an ASX growth share.
Why Flight Centre is a turnaround opportunity
Flight Centre is the second of today's ASX growth shares in question. It has had a turbulent few years, but it's emerging as a leaner, more efficient business.
The recent sell-off, driven by a softer first-quarter update, hasn't spooked everyone. Au contraire, it has excited some experts.
Fund manager L1 Capital sees Flight Centre as a turnaround story, citing its improved operational structure and ambitious profitability targets.
The company "has also shifted the mix towards more luxury travel and independent store networks".
According to my colleague Tristan, the company aims for a 2% profit margin over the medium term, which, if achieved, could translate into a 50% profit boost from 2024 levels.
According to CommSec, the consensus rates the stock a buy and sees earnings growth of approximately 17% per year for the next two years.
Macquarie also rates the stock a buy with a $23.34 price target, suggesting a potential 37% upside from Flight Centre's closing price on Thursday.
Why these ASX growth shares could deliver
These two ASX growth shares might be candidates on your list after reading what the experts have said on their prospects.
Remember that growth shares do have the potential for higher earnings growth, but there are also valuation factors to consider.
Flight Centre is down 11% in the past year, whereas Neuren is down 16%.
