3 compelling ASX growth shares to buy

There are 3 compelling ASX growth shares to buy in this article including Audinate Group Ltd (ASX:AD8) and Pushpay Holdings Ltd (ASX:PPH).
The post 3 compelling ASX growth shares to buy appeared first on The Motley Fool Australia. –

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There are some compelling ASX growth shares to look into right now.

Here are some of those ideas:

Audinate Group Ltd (ASX: AD8)

Audinate is an ASX growth share that owns the Dante platform, which distributes audio signals across computer networks. The company boasts about being the lead supplier of digital and audio video networking for the professional AV industry.

The sectors of corporate conferences and higher education have been recovering well for Audinate since May. However, other groups of Audinate’s customer groups are still struggling, such as live sound and large events.

In the first quarter of FY21, it generated revenue of US$5.2 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of AU$0.3 million. For the first half of FY21 it made US$11.1 million of revenue.

Audinate also revealed that it is investing money on a video development team in Cambridge. The ASX growth share thinks that video will be a key part of growing Dante and expanding its total addressable market.

EML Payments Ltd (ASX: EML)

EML Payments has a number of different payment services for clients to use. EML Payments has general purpose reloadable offerings such as gaming payouts with white label gaming cards, salary packaging cards, commission payouts and rewards programs. EML Payments also offers physical gift cards, shopping centre gift cards and digital gift cards. Finally, the ASX growth share offers virtual account numbers.

In the first quarter of FY21 EML’s total revenue grew 20%, compared to the fourth quarter of FY20, to $40.6 million. EBITDA generated in the FY21 first quarter was $10 million, which was 69% higher than the fourth quarter of FY20.

Dominic Rose from Montgomery Lucent Investment Management said at the start of December that the company was bouncing back well from COVID-19 impacts. He said: “the recent encouraging vaccine news materially increases confidence in a solid earnings recovery in FY22. Market estimates are for earnings before interest, tax, depreciation and amortisation to rebound 40 per cent in FY22 to $74 million, still well below pre-COVID expectations of $95-100 million.

“Looking back, one positive arising from the pandemic was EML’s ability to reprice and restructure the Prepaid Financial Services (PFS) deal in late March, allowing the company to retain a strong balance sheet ($118 million net cash as at the end of June) which offers optionality for further acquisitions. Valuation remains attractive for the growth potential of the business, in our view, with the stock trading on 12x recovered EBITDA (FY23 EBITDA $93 million).”

According to Commsec, EML Payments is priced at 38x FY23’s estimated earnings.

Pushpay Holdings Ltd (ASX: PPH)

This ASX growth share is quickly becoming an important player in the electronic donation space for the large and medium US churches.

Pushpay expects “significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.”

The company has continued to see its profit margins continue to rise. In the FY21 half-year result its gross profit margin went up from 65% to 68% and the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin rose from 17% to 31%.

In FY21 the company is now expecting EBITDAF to be in the range of US$56 million to US$60 million. This is the latest profit upgrade from the company.

According to the Commsec, Pushpay is valued 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 and recommends EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO and PUSHPAY FPO NZX. The Motley Fool Australia has recommended AUDINATEGL FPO, EML Payments, and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 compelling ASX growth shares to buy appeared first on The Motley Fool Australia.

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