There are a few ASX shares that could be worth owning in your portfolio for the long-term, such as City Chic Collective Ltd (ASX:CCX).
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The end of last week saw the share prices of some ASX shares tumble in response to global market gyrations.
Lower share prices may mean it’s an opportunistic time to consider some quality ASX shares that the market isn’t as excited about now.
The below two businesses are still reporting a lot of growth for shareholders:
City Chic Collective Ltd (ASX: CCX)
City Chic describes itself as a global omni-channel retailer specialising in plus-size women’s apparel, footwear and accessories.
It has a number of different brands including City Chic, Avenue, Evans, CCX, Hips & Curves and Fox & Royal. A core component of the business is that it has a network of 96 stores across Australia and New Zealand. It also has websites in ANZ, the US and UK, as well as marketplace and wholesale partnerships in the US, UK and Europe.
The ASX share is currently liked by a number of brokers, including Morgan Stanley. It has a share price target for City Chic of $4.75.
Morgan Stanley is a fan of the high level of online sales and growth which can lead to rising profit margins.
In the recent FY21 half-year result, City Chic reported that its sales grew by 13.5% to $119 million off the back of comparable sales growth of 20.8% excluding Victorian store closures. Online sales grew by 42% and represented 73% of total sales.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 21.8% to $23.3 million and the EBITDA margin improved from 18.2% to 19.6%. This helped the statutory net profit after tax (NPAT) rise by 24.8% to $13.1 million.
Morgan Stanley has projected that City Chic is going to generate 10 cents per earnings per share (EPS) in FY21, which means it’s trading at 40x FY21’s estimated earnings.
Redbubble Ltd (ASX: RBL)
Redbubble is an online artist product ASX share that’s liked by the brokers at Morgans.
It said that the fall in the share price after the report’s release was likely a bit too hard. However, it did say that EBITDA was not quite as strong as expected because of higher advertising spending and lower gross profit margins in the second quarter.
But, Redbubble has started the FY21 second half strongly and Morgans believes that the consumer shift to shopping online is permanent and will help Redbubble’s growth.
Redbubble reported that excluding a positive adjustment for delivery dates normalising, it generated $343 million of marketplace revenue (paid), up 90%. It also grew gross profit (paid) by 102% to $138 million and earnings before interest and tax (EBIT) (paid) came in at $35 million, compared to $0.2 million in the prior corresponding period.
In January the ASX share said that its marketplace revenue (paid) had grown by 66% (or 82% on a constant currency basis).
Redbubble said that it’s targeting four key initiatives. The first is acquisition, activation and retention of artists. Second, acquiring users and optimising transactions. Third, customer understanding, loyalty and brand building. The final focus is further physical product and fulfilment network optimisation.
Morgans has a share price target of $6.64 for Redbubble. It thinks it can make $0.20 of EPS in FY22, meaning it’s valued at 26x FY22’s estimated earnings.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.