CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Top 5 ASX growth stocks to watch in September

This month, we spotlight five growth-oriented companies that investors and traders may consider worth watching in the month(s) ahead.

Value VS growth

The balance between growth and value has always been a precarious one in financial markets, with each witnessing its their periods of pronounced outperformance. Growth stocks – particularly in the US – have dominated the broader narratives in financial markets over the last few years.

FAAMG stocks – made up of Facebook, Apple, Amazon, Microsoft and Alphabet (Google) – have effectively rewritten the rules of the stock market, trading on modest multiples but reporting blistering growth, season after season.

By comparison, value stocks, which in the most basic of terms could be defined as a stock trading on a low earnings multiple have fallen out of favour in recent years. These types of stocks often inhabit out of favour industry like coal or manufacturing, or represent companies that ‘will eventually turn it around’.

While it’s hard to match the quality of the FAAMG cohort, the ASX is home to a number of fast-growing stocks. Though Afterpay is likely the most well-known, even more so now that it is being acquired by growth giant Square, there are others, that investors and traders may consider worth keeping an eye on.

What is a growth stock?

For the purpose of this ‘top 5 list’, we define a growth stock as a company that has most recently reported top-line growth in excess of 20%. While a basic definition, this provides a good starting point for individuals looking for ASX-listed companies that are growing quickly.

To that end, below we highlight five ASX-listed stocks that have reported impressive revenue growth in recent periods, including:

Company

Ticker

Industry

YTD performance*

Temple & Webster

TPW

Internet Retail

+13.73%

Splitit

SPT

Software—Infrastructure

-67.31%

Kogan

KGN

Internet Retail

-44.03%

Breville

BRG

Furnishings, Fixtures & Appliances

+25.82%

Airtasker

ART

Internet Content & Information

-31.17%*

*From January 1 to September 2,

**From March 26, 2021.

You can trade any of the five stocks discussed today – long or short – with an IG Account. Click here to open an account with us here.

Where this article refers to the best or top Australian growth stocks, these are stocks based on the definition of a growth stock set out above. Note that we do not give financial advice. Remember, the best stocks for you will always be ones underpinned by your own thorough analysis of both the company and the market.

Temple & Webster share price: +13.73% YTD

The homewares company has exploded in popularity in recent years, with the stock up a staggering 9,000% in the last 5-years. Its popularity spiked off the back of the covid-19 pandemic, as people rushed to outfit their homes with a variety of beautiful homewares – from desks to lamps. Off the back of that mammoth share price run, management has continued to execute on its operational vision expertly, with the company reporting the following full-year FY21 results:

  • Revenue of $326.3 million, up 85% year-on-year
  • Earnings (EBITDA) of $20.5 million, up 141% year-on-year and profits (NPAT) of $14.0 million, up 165% year-on-year
  • Active customers of 778 thousand by the close of FY21

Splitit share price: -67.31% YTD

Splitit – trading under the ticker SPT – occupies an interesting position within the BNPL industry, in that the company allows users to leverage their existing debt card to ‘split’ the payment of their purchases over a number of installments. As management argues, this allows customers to keep ‘their payments small so they keep more of their money for living’.

The company has notched up strong growth off the back of this point of differentiation, for the 2021 first-half, reporting:

  • Total sales volume of US$172.5 million, up 94% year-on-year
  • Gross revenues of US$5.5 million, up 79.7% year-on-year
  • Total shoppers increased 83% year-on-year to come in at 556 thousand

Kogan share price: -44.03% YTD

The online-only e-commerce retailer has proven to be a divisive stock over the years. While share sales by management and chunky options grants have courted backlash in recent times, the company has continued to notch up strong growth, before and during the pandemic. Most recently Kogan passed $1 billion in gross sales for the first time in its history, despite facing supply chain issues as a result of the pandemic.

As part of the company’s recent full-year FY21 results, Kogan reported the following:

  • Gross sales of $1.19 billion, up 52.7% year-on-year
  • Total revenues of $780.7 million, up 56.8% year-on-year
  • Statutory NPAT of $3.5 million
  • Total active Kogan customers of 3.2 million

You can read our complete breakdown of Kogan’s FY21 results here.

Breville share price: +25.82% YTD

As with Temple & Webster, as the pandemic has seen more and more people spend increasing amounts of time indoors. This looks to have resulted in increased demand for the types of appliances produced and marketed by Breville, including high-end coffee machines. Indeed, despite facing supply chain issues of its own, Breville posted impressive top and bottom-line growth as part of its more recent full-year FY21 results.

  • The highlights of these results included:
  • Total revenues of $1,187 million, up 24.7% year-on-year
  • Total earnings (EBITDA) of $163.3 million, up 36% year-on-year; profits (NPAT) of $91.0 million, up 42.3% year-on-year
  • Full-year dividends came in at 26.5 cents per share (full-franked)

Want to learn more? Read our full coverage of Breville’s results now.

Airtasker share price: -31.17% since March 26

Airtasker helps connect people who want work done to people willing to do that work. Think: Uber, but for small to medium-sized tasks. Despite seeing its share price fall since IPO – down 32% since March – Airtasker has continued to notch up solid growth. As part of its most recent full-year results, the company reported the following key statistics:

  • Revenue of $26.6 million, up 38% year-on-year
  • Marketplace volumes of $153.1 million, up 35% year-on-year
  • Underlying (pro forma) earnings (EBITDA) of $0.0M, up from a $4.0 million loss the year prior
  • 415 thousand unique paying customers, ahead of forecasts

How to trade and invest in growth stocks

By comparison to owning the shares outright, derivatives trading – such as CFD trading – allows you to speculate on the price movement of stocks without actually taking ownership of them. CFD trading may prove attractive to some investors for a number of reasons, including the flexibility to trade stocks long and short, the ease of which it allows one to hedge, as well as the ability to gain larger exposure to an asset through leverage. While leverage enables you to spread your capital further, it is important to keep in mind that your profit or loss will still be calculated on the full size of your position. This means both profits and losses can be magnified compared to your outlay.

Follow these steps below to start investing or trading ASX-listed growth stocks:

Investing in growth stocks

  • Create or log in to your share dealing account and go to our trading platform
  • Search for the stock you would like to invest in
  • Select ‘buy’ in the deal ticket to open your investment position
  • Choose the number of shares you want to buy
  • Confirm your purchase and monitor your investment

Trading growth stocks

  • Create or log in to your trading account and go to our trading platform
  • Decide whether CFD trading is right for you
  • Search for the stock you would like to trade
  • Choose your position size
  • Open your position and monitor your trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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