Broadly speaking, an ASX growth stock is a company that is anticipated to grow profit and revenue faster than the general market.
Typically, earnings growth leads to stock price growth.
One ASX growth stock that has done just that is Australian Ethical Investment Ltd (ASX: AEF).
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Growth stock overview
Australian Ethical Investment is a funds management company that specialises in environmentally and socially responsible investments.
For those who aren't familiar, many companies and exchange-traded funds (ETFs) market themselves as aligning with specific ethical, environmental, or social standards.
However, sometimes this can be more talk than action. This is sometimes called "greenwashing".
However, Australian Ethical Investment Ltd touts itself as going beyond standard environmental, social, and governance (ESG) criteria to actively seek to invest in companies that "do good".
According to AEF, it aims to make a difference by "directing investment towards businesses doing better in the areas that matter most."
A big 2025
It seems the ethos of the company is resonating with investors, as this ASX growth stock has seen its share price surge 44.62% higher since the start of the year.
For context, the S&P/ASX 200 Index (ASX: XJO) is up about 9% in the same period.
This was likely driven by positive FY25 results, which included:
- Underlying Profit After Tax (UPAT) of $23.8 million, up 29% on FY24.
- Net Profit After Tax (NPAT) attributable to shareholders of $19.9 million, up 68% on FY24.
- The ethical investment manager reached a new funds under management (FUM) record of $13.94 billion (up 34% on 30 June 2024).
If you had invested $10,000 in January in this ASX growth stock at $5.20 each, you would have purchased approximately 1,923 shares.
Since then, the share price has risen by 44.62%, closing yesterday at $7.52 per share.
As a result, your initial investment would now be worth roughly $14,458, representing a gain of about $4,458.
This is before taking into account any dividends or reinvestment plans.
