I've had NextDC Ltd (ASX: NXT) and Webjet Limited (ASX: WEB) on my watchlist all year. These two growth shares have strong propositions which are geared towards tomorrow's consumer and business needs. I'm confident that they can deliver strong near to long-term returns.
In the YTD, Webjet has returned a savvy 34.7% to its investors, yet sunk 3.8% in the last two weeks. On the other hand, NextDC has dropped 2.7% in the last trading day alone. This is a result of a global sell off in the markets, with hiking trade wars between the US and China.
With slightly cooler valuations, this could be the time to invest in these growth shares in anticipation of mid-year earnings results.
NextDC
NextDC develops and operates independent data centres across Australia. It has data centre infrastructure which allows enterprises to outsource its data via cloud connectivity and services to support these functions.
We live in a data-driven world that relies heavily on computing power. Data centres have been a convenient and cost-effective way for companies to shift IT networks from workplace to cloud servers. This allows operations like data security and maintenance to be outsourced. The net effect is a reduction in capital expenditure.
Indeed, NextDC hasn't had a smashing year compared to the S&P/ASX200. In fact, it slid 16.1% since its annual high of $7.20 in February to $6.20 as of yesterday. This was a result of the company downgrading FY guidance from a range of $180 – $184 million from $183 – $188 million.
However, from a product perspective, NextDC's metric are improving. Interconnections were up 34% to 9,982 and contracted utilisation shot up 28% to 50.4MW. The appetite for enterprise data-storage solutions is only growing, and NextDC's world class data centres are positioned to benefit lucratively.
Webjet
Webjet is both a B2c and B2B digital travel agency. It enables users to compare and combine flights, accommodation, packaged holiday deals, insurance and hire cars domestically and internationally.
It's Webjet's B2B segment, WebBeds, that have stunned investors. This is Webjet's accommodation booking platform that connects travel agents and tour companies with hotel operators. WebBeds' EBITDA grew 135.2% to $30.1 million in just 6 months to December 2018. Webjet itself amassed a whopping 42% growth in EBITDA to $58 million to secure the second largest market share in the B2B travel industry.
These stellar results were in part driven by Webjet's acquisitions of JacTravel, which wholesales hotel rooms and group tours, and Destinations of the World, a B2B accommodation wholesaler.
Though it's unlikely Webjet will return a further 50% to its investors, I firmly believe in the company being a category winner in the travel space on the ASX.
If NextDC or Webjet aren't in industries you invest in, you should check out this high-growth company instead.
