Adore Beauty is one of the quality ASX shares that could be worth looking at this weekend.
The post 2 quality ASX shares to look at this weekend appeared first on The Motley Fool Australia. –
There are a few quality ASX shares that could be worth looking at this weekend.
Businesses that are growing quickly and have long-term growth plans may be ones to consider. Companies in the tech space or have international growth potential could be able to produce good returns over time.
Here are two ASX shares to think about:
Adore Beauty Group Ltd (ASX: ABY)
This business is a large beauty focused e-commerce website that sells over 10,000 products from more than 260 brands. It currently operates in Australia and New Zealand. The Adore Beauty share price has fallen 6.5% over the last two weeks.
The ASX tech share is going to report its result next week. It’s expecting to report a lot of revenue growth. The guidance is for revenue to grow between 43% to 47%.
When Adore Beauty released its FY21 third quarter, it said that it continues to see a structural shift in consumer behaviour towards online retail, based on continued strong retention of customers acquired during the COVID-19 lockdown.
In that third quarter, it delivered revenue of $39.4 million, which was an increase of 47% on the third quarter of FY20.
The FY21 growth, in percentage terms, is expected to be more than FY20’s growth rate.
Adore Beauty says it continues to invest with discipline to drive revenue growth and expand its online leadership position.
The beauty and personal care market in Australia is worth $11.2 billion and is expected to grow at a compound annual growth rate of 26% to 2024. Online sales only make up 11.4% of this market, a lower rate compared to markets like the US and the UK.
Management are expecting operating leverage as it gets bigger because of the largely fixed nature of its cost base.
Magellan Financial Group Ltd (ASX: MFG)
The Magellan share price has fallen 16% over the last month. This is a large funds management business that predominately invests in global shares on behalf of investors. But it also has strategies focused on infrastructure businesses and Australian shares too.
The ASX share diversified its business further in FY21 by making a few external investments into businesses such as Barrenjoey, FinClear and Guzman y Gomez. It was the start-up expenses of investment bank Barrenjoey that caused the Magellan’s FY21 statutory profit to fall 33% to $265.2 million.
However, the core business continues to see profit and profitability rise. Magellan’s average funds under management increased by 9% to $103.7 billion. This helped profit before tax and performance fees of the funds management business rise by 10% to $526.6 million.
Magellan launched a number of other funds and strategic initiatives that may help grow FUM further. Those included the MFG core series, the Magellan sustainable fund and the Magellan FuturePay (retirement) product.
The fund manager’s FUM had grown to $117 billion by the end of July 2021.
Magellan is currently rated as a buy by the broker Morgans with a price target of $54.85. Using the broker’s projections, it is valued at 16x FY23’s estimated earnings with a partially franked dividend yield of 5.8%.
Should you invest $1,000 in Magellan right now?
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Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.