These 2 ASX growth stocks could offer great value after recent declines

WiseTech Global Ltd (ASX: WTC) and Corporate Travel Management Ltd (ASX: CTD) were amongst the few winners on the ASX on Wednesday. Here's why I think it could be a sign to invest.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On a day when the ASX shed $30 billion, WiseTech Global Ltd (ASX: WTC) and Corporate Travel Management Ltd (ASX: CTD) were amongst the few companies whose share prices actually finished Wednesday higher. Corporate Travel Management gained a touch over 3%, while WiseTech was up 2.29%.

This is a pleasing result for shareholders in both companies, who have seen their holdings savaged over the last couple of months. Growth stocks in the health and technology sectors were hit especially hard in October, and WiseTech's share price dropped over 25% over the course of the month. Other market darlings like Afterpay Touch Group Ltd (ASX: APT), Appen Ltd (ASX: APX) and CSL Limited (ASX: CSL) also took a hammering.

But WiseTech and its shareholders will hope that the small gains seen today, under particularly tough conditions, could be a sign that the market is showing renewed faith in the company. And it has shown faith in WiseTech before – as recently as August WiseTech's share price shot up over 50% in two days as a reward for its surprisingly strong FY18 financial results.

Revenues for the year were up 44% to $221.6 million, EBITDA was up 45% to $78 million, and NPAT was up 28% to $13.9 million. And there is no reason to think that this strong performance can't continue into FY19. Since the release of the FY18 results, WiseTech has announced a number of new acquisitions, most recently Swedish customs solutions provider CargoIT. The company has previously stated its intention to position itself as a logistics and supply chain management provider for European companies having to deal with the complexities of international trade post-Brexit.

WiseTech even recently upgraded its FY19 guidance. It now expects revenues for FY19 of between $320 million and $333 million and EBITDA of between $102 million and $107 million. This represents high double-digit growth.

Corporate Travel Management also had a particularly difficult end to the month, but for very different reasons. Its share price tumbled almost 30% in a matter of days after it came under attack from Sydney-based hedge fund VGI Partners. The hedge fund circulated a 176-page report detailing perceived weaknesses in Corporate Travel Management's business. The hedge fund continues to hold a significant short position in the company – meaning it believes the Corporate Travel Management share price has further to fall.

The damage to Corporate Travel Management's share price was so swift and severe that the company placed its shares into a trading halt at the end of October as it scrambled to put together a response to VGI's claims. Corporate Travel Management rejected a number of the assertions made in the VGI report, particularly that a change in its revenue recognition policy had materially overstated its FY18 earnings.

Whether or not the VGI claims have merit, the report definitely left Corporate Travel Management shareholders rattled, especially after they had seen the company's share price surge to an all-time high of $33.87 in September. After the VGI attack Corporate Travel Management is trading back down at $22.90, only slightly above the 52 week low of $19.20 it hit last week.

Foolish takeaway:

The attack from VGI certainly caught the market off-guard, and the fact the hedge reportedly increased its short position in Corporate Travel Management as recently as last week won't ease investor concerns. An article in the Australian Financial Review last Monday stated that Morgan Stanley had cut its price target for the stock in light of the VGI report, down from $35 to $27. But that still represents a significant premium on its current price.

To me, WiseTech seems like the safer bet out of these two growth stocks given the current conditions. It appears as though shares in the logistics software company were oversold in the tech stock rout in October. If it can deliver on its growth forecasts then I anticipate its share price recovering strongly in FY19.

Motley Fool contributor Rhys Brock owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

Man with rocket wings which have flames coming out of them.
Technology Shares

Guess which ASX All Ords share is rocketing 16% on an asset sale

This share is catching the eye with a very big gain on Friday. But why is it rising?

Read more »

a man clasps his hand to his forehead as he looks down at his phone and grimaces with a pained expression on his face as he watches the Pilbara Minerals share price continue to fall
Technology Shares

Why are Megaport shares sinking 14% on Friday?

Why are investors hitting the sell button? Let's find out.

Read more »

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Why today is a big day for this ASX 200 AI stock

This company stands to benefit from 'one of the most profound transformations in the history of technology'.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Technology Shares

Why are WiseTech Global shares crashing almost 20% today?

Recent controversy has led to delays to an important launch and hit its revenues.

Read more »

Woman with speaker
Technology Shares

After falling 62%, this leading ASX 200 share could be gearing up for growth!

This industry-leading company looks like a turnaround opportunity to me.

Read more »

A man has computer-generated images rushing through his head indicating an AI (Artificial Intelligence) concept of a communication network.
Technology Shares

ASX investors are obsessed with Nvidia shares! Here's why

The global chipmaker reported a 94% increase in annual revenue in the third quarter.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

Own WiseTech shares? Here's what to watch at Friday's AGM

This could be one of the major events of the year.

Read more »

Woman and man calculating a dividend yield.
Technology Shares

This ASX tech stock is down 93% from its highs. Could Trump tariffs give it a boost?

The ASX tech stock could enjoy tailwinds from Trump’s threatened tariffs.

Read more »