When people talk about ASX growth shares, the focus often falls on the same familiar names.
That makes sense. Quality businesses tend to attract attention. But it also means some companies with genuine earnings potential get overlooked, especially if they operate in less glamorous niches or have gone through periods of volatility.
These are three ASX growth shares that I believe are underappreciated today, not because they lack quality, but because their earnings power is not always obvious at first glance. Here's why I would invest $1,000 in them.
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Catapult Sports Ltd (ASX: CAT)
Catapult is a company I think many investors still underestimate.
It operates in elite sports performance technology, providing wearable devices and analytics software used by professional teams around the world. Once a team embeds Catapult's technology into its training and performance systems, switching providers is not easy. That creates customer stickiness that is easy to overlook if you only focus on short-term results.
What gives Catapult real earnings power, in my view, is the combination of recurring software revenue and operating leverage. The company has already invested heavily in product development and global distribution. As revenue continues to grow, particularly from subscriptions, incremental margins should improve.
Catapult is not without risk, and its share price has reflected that over time. But as its top line growth and cash flow improves, I think the market may start paying more attention to the underlying economics of the business rather than just its history.
Sigma Healthcare Ltd (ASX: SIG)
Sigma is a company that looks very different today than it did a few years ago.
Following its merger with Chemist Warehouse, Sigma has become a vertically integrated healthcare group with scale across wholesale distribution, franchising, and retail pharmacy. That scale matters. It provides purchasing power, operational efficiencies, and a more defensible competitive position.
Healthcare demand is structural rather than cyclical. People need access to medicines and pharmacy services regardless of economic conditions. This gives Sigma a level of earnings resilience that is often underappreciated by the market.
The Chemist Warehouse integration process does carry execution risks, and I would not pretend otherwise. But if management delivers on integration benefits and cost synergies, Sigma's earnings profile could look very different over the next few years. That potential upside is not something I think is fully reflected in current sentiment.
Hub24 Ltd (ASX: HUB)
Hub24 is one of my preferred ways to gain exposure to the structural growth of Australia's wealth management industry.
The shift toward platform-based investing, transparency, and adviser-led solutions continues to benefit Hub24 and underpin funds under administration growth.
What I like about Hub24's earnings power is how clean the model is. Revenue scales with platform usage, costs are relatively controlled, and the business benefits from long-term industry trends rather than short-term market sentiment.
Hub24 shares are not cheap on traditional valuation metrics, which may be why some investors hesitate. But I think that misses the point. Businesses that consistently grow earnings at attractive rates and generate high returns on capital rarely look cheap. For me, Hub24's ability to convert growth into profits is what makes it stand out.
The common thread
What links Catapult, Hub24, and Sigma is not hype or short-term momentum. It is the presence of real earnings power that can become more visible over time.
Each operates in a market with structural tailwinds. Each has a business model that can scale. And each, in my opinion, is still not fully appreciated for what it could earn if execution remains solid.
