Are you looking for big potential returns? If you are, then it could be worth checking out the ASX growth shares listed below.
That's because Goldman Sachs believes they could be dirt cheap at current levels. Here's what the broker is saying about them:
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IDP Education Ltd (ASX: IEL)
This language testing and student placement company's shares are down 33% since the start of the year. This has been driven by concerns over tough operating conditions caused by visa changes in key markets.
While Goldman acknowledges that FY 2025 is going to be a disappointing year for this ASX growth share, it believes it is worth sticking with the company. Especially given its belief that IDP Education's earnings growth will return in FY 2026 and then it will be onwards and upwards from there. It said:
We believe IEL's premium valuation is justified given the medium-term earnings potential driven by: (1) Structural growth in multi-destination placements, supplemented by an ongoing Australian recovery; (2) Ability to grow market share in the highly fragmented Canadian and UK SP markets; (3) Reinvestment in digital capabilities to increase competitive moat and generate new earnings streams.
Goldman has a buy rating and $19.00 price target on IDP Education's shares. Based on its current share price of $12.64, this implies potential upside of 50% for investors over the next 12 months.
Readytech Holdings Ltd (ASX: RDY)
Goldman Sachs also thinks that Readytech could be an ASX growth share to buy following a pullback in its share price this year.
Readytech owns a portfolio of enterprise software businesses across several market verticals such as higher education and local government.
Goldman highlights the company's high (and increasing) levels of recurring revenue and low churn levels as reasons to buy. In addition, the broker points that Readytech's defensive public sector end-markets and mission critical software solutions should protect its earnings in the event of an economic slowdown.
In light of this, it feels that the company's shares deserve to trade on significantly higher multiples. It explains:
Further to its defensiveness, we believe the market has given RDY little credit for improving its organic profile since listing while the company has maintained solid margins and cash flow. In our view, RDY will continue to grow mid-teens organically, underpinned by solid software metrics such as low churn at ~3% and high LTV/CAC.
RDY trades at a large discount to ASX tech peers, both on an absolute and growth-adjusted basis, which we believe is too wide considering RDY's business quality and growth outlook.
Goldman has a buy rating and $4.25 price target on its shares. Based on its current share price of $2.92, this suggests that upside of 45% is possible over the next 12 months.
