The ASX growth share space is an exciting area to look for opportunities, particularly after the market tariff sell-down, which has led to cheaper valuations.
When businesses are regularly growing their profit, it makes it much easier to judge that the price-earnings (P/E) ratio has lowered and the business is more attractive when its share price falls.
I'm always on the lookout for compelling businesses that would be good long-term investments. The two stocks below are two of the best companies on the ASX.
REA Group Ltd (ASX: REA)
REA Group owns a number of Australian property-related businesses, including realestate.com.au, realcommercial.com.au, Flatmates.com.au, property.com.au, Mortgage Choice, PropTrack, and more. It also owns a controlling interest in REA India, the operator of established brands Housing.com and PropTiger. It's invested in Easiloan, a platform for end-to-end digital processing of home loans in India. It also owns 20% of Move Inc, the operator of realtor.com in the US.
The ASX growth share has grown significantly thanks to an increase in property advertising fees, operating leverage, and the growth of the number of listings.
Ongoing growth of Australia's population and the number of properties nationally helps increase its potential revenue in Australia.
The FY25 half-year result saw operating revenue rise 20% to $873 million, operating profit (EBITDA) grow 22% to $535 million, and net profit after tax (NPAT) increase 26% to $314 million. Excitingly, REA India delivered revenue growth of 46% to $64 million – this segment of the business is rapidly scaling. I think the Indian business could become much bigger in the next five to ten years.
In terms of valuation, the REA Group share price is down 14% since 12 February 2025, which is a sizeable reduction, as the chart below shows.
It's now valued at 65x FY25's estimated earnings.
Pro Medicus Ltd (ASX: PME)
Pro Medicus is one of the largest tech-related businesses on the ASX. It provides a full range of medical imaging software and services to hospitals, imaging centres, and healthcare groups worldwide.
It offers a suite of radiology imaging solutions (RIS), picture archiving and communication systems (PACS), artificial intelligence (AI), and e-health solutions that provide an end-to-end offering in healthcare imaging.
In my eyes, the company may be the highest-quality business on the ASX. It reached an extraordinary underlying operating profit (EBIT) margin of 72% in the FY25 first half, up from 66% in HY24.
A great advantage of a high profit margin is that a lot of the new revenue turns into additional net profit. The ASX growth share's HY25 revenue rose 31.1% to $97.2 million, while net profit jumped 42.7% to $51.7 million.
The business continues to win contracts from large clients, particularly in the US, which is adding to the country's scale and profitability. It's growing momentum and suggests it could win further contracts in the coming months and years.
As the chart below shows, the Pro Medicus share price has fallen 31% since 19 February 2025.
While it still has a high P/E ratio, it's significantly cheaper and could rapidly grow its profit for years to come.
