A few ASX shares are seeing strong levels of growth since COVID-19 hit the world. One idea is Ansell Limited (ASX:ANN).
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Some ASX shares are seeing stronger levels of growth at the moment during this period of the COVID-19 pandemic. They could be worth looking at.
Here are two ideas:
Kogan.com Ltd (ASX: KGN)
Kogan.com is an e-commerce business that sells a wide variety of products and services on its website. That includes: TVs, computers, phones, tablets, ‘wearables’, cameras, drones, heating and cooling, appliances, clothes, shoes, tools and cars. The services that it sells includes mobile, home internet, energy, insurance and superannuation.
For customers that want it, there’s a membership service offered by the ASX share called Kogan First.
Mr Kogan, the founder of the company, spoke about the benefit to the company of its growing number of people using its loyalty scheme at the FY20 result: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”
The ASX share’s FY20 saw gross sales growth of 39.3% to $768.9 million, which helped gross profit increase by 39.6% to $126.5 million. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) went up 57.6% to $49.7 million and net profit after tax (NPAT) grew 55.9% to $26.8 million. Its financial numbers have accelerated as customers look to online shopping to find the items they want.
During FY20, Kogan.com acquired Matt Blatt, which the company described as a pioneer in Australian online furniture retail.
In December 2020, the company announced the acquisition of New Zealand-based Mighty Ape. This Kiwi business has a focus on gaming, toys and other entertainment categories. In FY21, Mighty Ape is expected to generate AU$137.7 million of revenue and AU$14.3 million of EBITDA, which would represent growth of 43.7% and 254.1% respectively.
The Kogan.com management said that the combination of two market leaders enables Mighty Ape to build on its strong customer offering, and provides the infrastructure to scale further.
The ASX share has said that in the first half of FY21, gross sales grew by more than 96%, gross profit went up 120%, adjusted EBITDA rose by more than 175% and EBITDA grew 140%.
At the current Kogan.com share price, it’s trading at 24x FY23’s estimated earnings.
Ansell Limited (ASX: ANN)
Ansell is an industrial ASX share that may be best known for its protective gloves that are used for various purposes. There are other products that it sells including chemical protective clothing.
In the latest Ansell trading update, the company reported that it’s still seeing high levels of growth because the COVID-19 pandemic continues to rate across the world, particularly in the northern hemisphere. Items in high demand include examination, life sciences and chemical protective clothing.
The company has been focusing on being more efficient so that it can produce more, it has also invested to achieve higher capacity at its manufacturing plants. The company claimed that it has been able to safely meet higher demand, whilst others in the industry have struggled.
Ansell has been hit by higher raw material costs during these times, but the ASX share has managed to pass on these costs to customers.
There may still be future problems relating to COVID-19 for Ansell, so management are still cautious about the shorter term.
However, Ansell gave an update about its expectation for revenue and profit in the upcoming FY21 half-year result. Ansell is expecting to report organic revenue growth of more than 20%, with earnings per share (EPS) in the range of 81 cents to 84 cents, representing growth 62% to 68%. It’s now expecting its FY21 EPS to be higher than 145 cents per share, beating its previous guidance. Further guidance will be given at the result.
At the current Ansell share price, it’s trading at 19x FY23’s estimated earnings.
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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 Kogan.com ltd. The Motley Fool Australia has recommended Ansell Ltd. and Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.