Today, we’ll look at the best Australian shares to buy on the ASX in 2021 that we think are the best growth stocks.
Some of these best growth stocks have already made strong gains and have a lot more upside potential to go.
With record low interest rates boosting capital markets, growth stocks that are highly leveraged to a bullish market will benefit most.
Even though growth stocks have taken a beating recently due to inflation fears and rotation into value stocks, this has presented an opportunity to grab some of the best growth stocks on the ASX for cheap.
The Best Australian Shares To Buy 2021
We’ve outlined the 5 best growth stocks to buy that we have found to have a good business plan with lots of upside potential and represents some of the best that the ASX has to offer.
South32 (ASX:S32) is an Australia-based metals and mining company with operations in South America, South Africa, and Australia.
The company has a product portfolio comprising commodities that are crucial for global decarbonization.
The company is thus well-positioned to take advantage of the shift to renewables that is in play globally.
The company recently announced plans to divest its thermal (energy) coal business to make its stock more attractive from the point of view of ESG investing, one of the fastest-growing investing themes globally.
South32 shares have benefitted handsomely from the commodities rally that followed the pandemic due to big infrastructural spending planned by major economies over the world and accelerated renewables adoption.
Breville Group Ltd (ASX:BRG) is one of Australia’s very few global consumer brands.
The company has carved a reputation for itself with its high-quality and attractively designed appliances.
Breville shares flourished despite last year’s pandemic due to consumers having to stay at home.
With more people cooking in, more appliances got ordered.
Unsurprisingly, the company posted a record financial performance over the past 12 months.
With the shift in the way we work globally, the company is planning to capitalise on it by shifting focus to high growth and global expansion.
Megaport is a cloud service provider across 130 cities and 23 countries and a NaaS (Network-as-a-Service) pioneer.
With the advent of COVID-19, cloud computing is becoming ubiquitous with working from home.
In fact, research and surveys have shown that up to 70% of companies expect between 5 to 20 per cent of their workforce to work from home post-covid.
The NaaS sector alone is forecasted to grow at 35% CAGR in the next 4 years.
With an all-star list of customers and partners such as Adobe, BHP, Tesla and Zoom, Megaport has proven that they have a quality and popular product to go with the strong growth in their revenue.
Even though growth stocks have fallen out of favour temporarily as investors rotate from high growth stocks to value stocks, companies such as Megaport will benefit permanently from a structural change in how we work post-COVID.
Megaport shares are currently trading about 22% down from their highs of $17.07 and could present an opportunity.
Healius (ASX HLS)
Healius is a healthcare services provider with three main businesses – pathology, imaging and medical centres.
With an aging population and a growing pathology industry, Healius is well-positioned to take advantage of the growth in this industry.
Even though the company has underperformed recently, a lot of this can be attributed to COVID-19.
As the world starts to dig itself out of the COVID-19 issue, we should see a strong rebound in revenue as a backlog of revenue is realised.
With an NTM EV/EBITDA valuation 10x lower than the likes of Cochlear (ASX COH) and 3.4x lower than CSL (ASX CSL), Healius is a good option to get exposure to healthcare with more upside potential in lieu of the more expensive options.
MoneyMe (ASX:MME) is an Australian financial technology company that provides an array of lending services.
The company’s AI-enabled procedures for fast and safe approval of loans led to significant growth because the pandemic triggered an accelerated structural shift from offline to online transactions.
The company has been successful at differentiating its products from other fintechs; it also offers products in some niche but high potential segments.
At the current MME share price, MoneyMe shares have a market capitalization of A$247 million.
Though the stock is down 19.2% from its pre-COVID price, the company has made significant progress in the past three quarters and pivoted to a minor profit in the first half of 2021.
We believe the MME share price is at an inflection point and MoneyMe shares present an investment opportunity.
How Do We Find Growth Stocks To Buy?
Growth stocks are generally driven almost entirely by qualitative factors such as first mover advantage, quality and quantity of assets, permits and technology.
Quantitative factors such as profit, revenue and so forth generally take a back seat.
Even though it is imperative that their financials are sound, when it comes to growth stocks, we are buying the story and perceived future value.
However, the very nature of valuing companies through qualitative factors means that there is a lot of room for error, opinion and subjectivity.
This means that high growth stocks tend to be small-cap, high risk and highly speculative.
The hardest part when it comes to finding growth stocks is the ability to process the information and factors at hand to make a good judgement call.
Our Research team specialises in this and has combed the ASX for some of the best growth stocks on the Australian market.
Make Your Money Work Harder For You
Picking the best stocks to buy now, timing the entry and having an edge in the market is not easy.
Download our special report below for another 5 best shares to buy now which comes with a special strategy that we use for our clients to make your money work harder for you.
Are you still looking for the best stocks to buy in 2021? We've put together a free report on 5 stocks that we think are the best buys on the ASX right now. Download it instantly here.
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This is general advice only. MF & Co Asset Management has not considered your personal financial needs, objectives or current situation. This information is not an offer, solicitation, or a recommendation for any financial product unless expressly stated. You should seek professional investment advice before making any investment decision.
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Henry is a co-founder of MF & Co. Asset Management with over 15 years of experience as a trader, investor and asset manager. His focus is on quantitative and qualitative stock analytics and advanced options strategies combined with statistical analysis to trade and invest for clients. You can catch him on ausbiz as a regular contributor talking on macroeconomic and trading themes.