There are some ASX shares that seem unstoppable with their growth. They just keep growing and growing.
Share prices don’t move in perfect unison with business growth, but if the business keeps delivering the growth then shareholder returns may follow.
Here are some ASX shares that have been delivering many years of growth:
Xero is a cloud accounting software business for small businesses. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device.
The ASX share offers an ecosystem of over 800 third-party apps and over 200 connections to banks and other financial partners.
Xero’s most recent result showed continued growth of the business. For the half-year result of the six months to 30 September 2020, subscribers increased by 19% to 2.45 million.
Looking at the individual markets, Australian subscribers grew by 21% to 1.01 million and revenue rose 18%. UK subscribers went up 19% to 638,000 and revenue went up 33%. New Zealand subscribers went up 13% to 414,000 with revenue rising 13%. North American subscribers went up 17% to 251,000 and revenue increased 4%. Finally, rest of the world subscriber numbers increased 37% with revenue going up 38%.
Operating revenue increased by 21% to NZ$410 million for the ASX share and the annualised monthly recurring revenue went up 15% to NZ$877.6 million. The gross profit margin increased 0.5 percentage points from 85.2% to 85.7%.
Due to the COVID-19 pandemic uncertainty, Xero was cautious with its spending growth. The limited spending growth helped Xero’s profit measures shoot higher. Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 86% to NZ$120 million. Net profit after tax (NPAT) rose by NZ$33.2 million to NZ$34.5 million and free cashflow increased by NZ$49.4 million to NZ$54.3 million.
Xero says that it’s a long-term orientated business with ambitions for high growth. It’s continuing to operate with disciplined cost management and targeted allocation of capital. The ASX share says this strategy allows the company to remain agile so it can continue to innovate, invest in new products and customer growth and respond to opportunities and changes in the operating environment.
CSL is Australia’s biggest healthcare businesses, indeed it’s one of the world’s biggest healthcare shares. It’s an important part of the health system in Australia and the US because of its involvement with vaccines, blood plasma and other services.
In FY20 it had a strong year with revenue increasing by 9% in constant currency terms and net profit after tax (NPAT) went up 17% in constant currency terms to US$2.1 billion. The company also grew the full year dividend by 9% to US$2.02 per share.
Originally, CSL was expecting FY21 NPAT to be between US$2.1 billion to US$2.265 billion in constant currency terms.
At the company’s annual general meeting (AGM) a couple of months after the FY20 report release, it said that NPAT is now expected to grow to between US$2.17 billion to US$2.265 billion, implying growth of between 3% to 8%.
CSL said it expects strong demand for its plasma and recombinant therapies to continue. Seqirus is expected to continue to benefit from strong demand for influenza vaccines. Sales of albumin are expected to normalise after the successful transition to the new business model in China.
COVID-19 restrictions are expected to restrain the ability to collect plasma and add to the overall cost of collection, though CSL is taking actions to mitigate this impact.
One of the things that’s hurting profit this year is the increased research and development (R&D) response to COVID-19, as well as new R&D initiatives, which is putting upward pressure on the overall R&D expense, but it’s still within the range of 10% to 11% of revenue that has previously been guided.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks
for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
See The 5 Stocks
*Returns as of June 30th