Experts are always on the lookout for ASX 300 Index (ASX: XKO) shares that have strong growth potential. The more a business can grow its profit, the higher valuation it can command.
The two businesses I'm going to talk about have been rated as buys by experts at broker UBS. Both businesses are predicted to generate significant revenue and profit growth in the coming years.
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Siteminder Ltd (ASX: SDR)
UBS describes Siteminder as a leading open hotel commerce platform, which offers accommodation providers a range of solutions across the guess lifecycle including distribution, bookings, operations management and business intelligence. It helps hotels automate manual processes and extend the reach of their accommodation offering.
In the recent FY25 half-year result released earlier this year, the business reported total revenue growth of 13.9% to $104.5 million and annualised recurring revenue growth of 1.4% to $216.2 million. Underlying operating profit improved $6.5 million to $5.3 million and underlying free cash flow surged $8.1 million to a loss of $0.6 million.
Clearly, the company's profit margins are rising. But, the ASX 300 share is expected to deliver a lot more growth.
UBS is forecasting the ASX 300 share can deliver $6 million of net profit after tax (NPAT) in FY26 and then steadily climb (while investing for growth), reaching $54 million of net profit in FY29.
The broker has a buy rating on the business, with a price target of $6.50. That implies a possible rise of 43% from where it is today.
TechnologyOne Ltd (ASX: TNE)
UBS describes this ASX tech share as an enterprise software business. It provides an integrated suite of software solutions across a variety of industries including local, state and federal governments, financial services, education, utilities and health and community services.
This business has operations in Australia, New Zealand, the UK, Asia and the South Pacific.
One of its key growth factors is its ability to grow revenue from its existing client base, as measured by the net revenue retention (NRR) figure. It invests heavily in research and development (R&D) to provide customers with a better offering than before, unlocking strong revenue growth. The ASX 300 share is aiming for NRR of 115% each year, implying 15% organic revenue growth.
Can the business achieve profit before tax (PBT) margin of 35% by FY28 and deliver NRR of 115%? UBS said:
Yes, supported by strong top-line growth driving some operating leverage over time, offsetting the initial margin impact from the transition to SaaS+. We expect TNE to achieve its targeted 35% PBT margins by FY28, which incorporates R&D investment in the 20-25% of sales indicative range over this period. Traction from recent product initiatives, better understanding of the unit economics and multiple conversations with Australian and UK customers have given confidence on the sustainability of TNE's 115%+ pa NRR target. We see TNE growing profits at ~20% pa medium term.
UBS currently has a price target of $42.20 on the business, with a buy rating.
