Sonic Healthcare is one of the ASX COVID shares to consider.
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There are some COVID-19 ASX shares that may be worth thinking about at the current prices with the growth they are creating.
It has been a difficult time over the last year and a half, however some companies have experienced elevated levels of growth.
Whilst certain industries are seeing a reversal of that strong sales growth, others are still seeing elevated levels of demand, like these two:
Sonic Healthcare Ltd (ASX: SHL)
Sonic is one of the world’s largest pathology businesses with a market capitalisation of just over $20 billion according to the ASX.
It says that it’s playing a crucial role in combating the COVID-19 pandemic in its markets, whilst continuing to provide its usual essential healthcare services. A total of around 138 million patients were served globally in FY21.
Approximately 30 million COVID-19 PCR tests have been performed to date in around 60 Sonic laboratories globally, and Sonic has become Australia’s largest non-government COVID vaccination provider. It has generated “significant” revenue and earnings in FY21 from COVID-19 testing.
The COVID-19 PCR test volumes were lower in the second half of FY21 compared to the first half, though volumes were increasing with the spread of the Delta variant.
In FY21, Sonic’s revenue increased by 28% to $8.8 billion and net profit rose 149% to $1.3 billion thanks to increased operating leverage and utilising existing assets and people. Excluding COVID testing, revenue was up 6% compared to FY20 and 4% compared to FY19.
The ASX COVID-19 share also grew its FY21 annual dividend by 7%.
Sonic is looking to spend some of its elevated profit on finding acquisitions and contracts that will help lock in growth compared to the pre-pandemic business.
At the current Sonic share price, it’s valued at 20x FY22’s estimated earnings.
Temple & Webster Group Ltd (ASX: TPW)
The Temple & Webster share price is down around 12.5% since the end of August 2021, which is when it released its statutory FY21 result.
The e-commerce retailer had already told investors near the end of July 2021 how it had performed in FY21.
But investors got an insight into the trading performance of the business in FY22 to 27 August 2021. It said that year on year revenue growth for the first few weeks of the current financial year was 49%.
Management pointed to a few different tailwinds that are helping the business. It noted the ongoing adoption of online shopping due to structural and demographic shifts, an acceleration of these trends due to COVID-19, an increase in discretionary income due to travel restrictions and strong housing market growth.
In FY21, despite strong investing for growth, Temple & Webster saw full revenue growth of 85% to $326.3 million and normalised net profit after tax (NPAT) jumped 165% to $14 million.
The COVID-19 ASX share is looking to invest in a number of areas to improve the customer experience as well as increase product ranges and become more efficient. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin is expected to be low in the next few years as it pursues this heavy investment strategy.
Should you invest $1,000 in Temple & Webster right now?
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*Returns as of August 16th 2021
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Sonic Healthcare Limited and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.