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2 explosive ASX growth shares named as buys

Here are a couple of growth shares growing rapidly…
The post 2 explosive ASX growth shares named as buys appeared first on The Motley Fool Australia. –

The Australian share market is home to a number of quality companies with solid growth prospects.

Two that have been tipped to grow strongly over the long term are listed below. Here’s why analysts think investors should be buying their shares:

ELMO Software Ltd (ASX: ELO)

ELMO could be a growth share to get better acquainted with. It is a cloud-based human resources and payroll software company with operations in the ANZ and UK markets.

It has been a strong performer over the last few years thanks to the shift to the cloud, its expansion, and the acquisition of Breathe and Webexpenses. Pleasingly, its positive form has continued largely unabated during the pandemic.

For example, in May ELMO released a trading update and upgraded its annualised recurring revenue (ARR) guidance for FY 2021 to be between $83 million and $85 million. This will be up 50.5% to 54.2%, respectively, on FY 2020’s ARR of $55.1 million.

Looking ahead, the company still has a very large market opportunity to grow into. Management estimates that it has a $12.8 billion opportunity across just the ANZ and UK markets.

Morgan Stanley currently has an overweight rating and $9.70 price target on its shares. The ELMO share price ended the week at $4.50.

Zip Co Ltd (ASX: Z1P)

Another ASX growth share that is highly rated is Zip. It is a leading buy now pay later (BNPL) provider with operations across several continents.

Thanks to the growing popularity of the payment method, its strong market position, and its international expansion, Zip has been tipped to grow strongly in the coming years. This is particularly the case for its US-based QuadPay business. The latter has been growing at a rapid rate. But given that only an estimated 10% of Americans have tried BNPL, it clearly has a long runway for growth in the $5 trillion market as penetration rates increase.

Shaw and Partners is very positive on the company. The broker has a buy rating and $16.00 price target on its shares. This compares to the latest Zip share price of $7.61.

The post 2 explosive ASX growth shares named as buys appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor James Mickleboro 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 Elmo Software and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Elmo Software. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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