Three High ASX Growth Stocks To Buy Now

Richard Hemming

In this article we look at three high growth stocks and shares to buy now. At Under the Radar Report what we look for in ASX Small Caps and growth shares is organic growth, which is the holy grail for all growth stocks both big and small. 

What are the best growth stocks ASX for 2021?

Small Caps are the best growth stocks ASX for 2021 as it's much easier for a small company to double or tripple in size than for a big company to grow by 5% or 10%. Over 50% of the Small Caps that we recommend pay dividends. We give you quality research on the growth stocks that you won't find anywhere else. The best growth stocks ASX that you might want to add to your long term portfolio for revenue growth include Volpara Health Technology (VHT), Nanosonics (NAN) and Medical Developments (MVP). These are asx stocks that our analysts agree offer the best risk, reward return. We last updated these Australian shares last month and update them again in this article.  

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How do you find growth shares?

To find an ASX growth shares to buy it is best to look at the company's fundamentals and analyse the numbers. A company that is positioned for growth will have good management, growing sales, and post covid will contiue to have a strong performance.  

Growth shares to buy: Volpara Health Technology (VHT)

Sector: Services

Market Cap: $303.7m

Current Price: $1.16

Dividend Yield: 0.0%

Volpara Health Technology (VHT) has game changing proprietary technology utilising AI to transform the early detection of breast cancer in the giant US market. It’s early stage and there a big risks, but it’s worth, at the very least, having a look at. This Small Cap produces a proprietary technology utilising AI to improve breast cancer screening and has succeeded in accessing the US market. This stocks sales multiple is very high, but so is its growth outlook. After a share price run subsequent to our spec buy recommendation its market cap is getting big, but we continue to think it is good value relative to its potential and is postioned as a growth stock ASX . 

What's new with this ASX growth stock?

The company's flagship product is Penthrox, which is an analgesic widely used by Australian medical professionals from GPs to dentists since the 1970s as a safe alternative to morphine to reduce pain. The drug has been gaining approvals in the UK/European markets. The company is also in the process of preparing to file applications in the US market. There is a respiratory division, which produces an inhaler device called a "Spacer" for asthmatics.  

The New Zealand based med tech is early on in its lifecycle, but is showing strong growth. In FY19 (12 months to 31 March 2019) the company generated NZ$5m in revenues and almost doubled its gross profit to NZ$4.1m. The bottom line loss increased from NZ$8.8m to NZ$11.7m. FY20 has started well with its annual recurring revenues (ARR - the normalised amount of cash the company expects to book over the next 12 months based on current contracts) was $NZ14.6m at the end of 1Q20 (30 June) and the company says it is on track to meet FY20 sales guidance of NZ$17.1m.

Growth stocks ASX VHT

Nanosonics (NAN)

Sector: Biotech

Market Cap: $1730.4m

Current Price: $5.74

Dividend Yield: 0.0%

Nanosonics makes specialised automated equipment to sterilise ultrasound probes. Its key products are Trophon EPR and the updated Trophon2 machines. The company also sells the associated consumables for use in the machine. Products are sold to hospitals to help manage the spread to infections in Australia and overseas markets including North America, UK and Europe. It has approval to market into a number of other countries in Europe, Asia and the Middle East.

What's happening with the share price of NAN?

The share price of this company reflects the law of large numbers and it will be interesting to contiue watching this growth share post covid. This growth stock has a market valuation just under $2bn. Unless its total addressable market is much bigger than these other companies, the possibility of it continuing sales growth and maintaining its sales multiple gets exponentially more difficult. We recognise how powerful this stock's niche is and we’ve taken risk off the table by realising some gains. 

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Growth stocks ASX-NAN.png

Medical Developments (MVP)

Sector: Pharmaceuticals

Market Cap: $358.4m

Current Price: $4.87

Dividend Yield: 0.2%

This company has invested millions in a global distribution network. We admit that the size of the global market for the Penthrox Green Whistle is very difficult to analyse and will only become clear over time. Against this, you have FY19 sales growth in Australian ambulances of 38%, which is the kind of growth potential we’re talking about on a global basis. This growth potential has been delayed, which is why the estimates are subdued, but (another but) this stock can surprise on the upside because of its investment in distribution. There are dozens of countries where this growth stock ASX is licenced to sell, where it has not sold anything yet, plus the potential from cracking the US and other markets.

What is this growth stock? 

The Green Whistle producer Medical Developments (MVP) is one of our best growth stocks ASX as we have had some success buying and selling this Australian share, but if you were simply going on the growth of 15% you would not be a buyer. So why are we recommending this Small Cap? It’s the growth potential that you can’t see that is embedded in its system that has got our attention, having covered the growth stock for a long time (We last covered this stock last month). 

We continue to rate this stock a Spec Buy, but it has had phenomenal growth potential due in no small part to its entry into the giant Chinese market, announced last month. We’ll be reviewing this growth stock in our next issue. 

Growth stocks ASX MVP

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About the Author

Richard Hemming

Richard Hemming (r.hemming@undertheradarreport.com.au) is an independent analyst who edits www.undertheradarreport.com.au, which provides investment opportunities in Small Caps that you won’t get anywhere else.

Under the Radar Report is licensed to give general financial advice only (AFSL: 409518). The author does not own shares in any of the stocks mentioned.

Under the Radar Report is licensed to give general financial advice only (ASFL: 409518). The author does not own shares in any of the stocks mentioned.

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