2 compelling ASX shares to buy in February 2021

There are some compelling ASX shares to buy that could be worth a look in February 2021. One of those picks is Kogan.com Ltd (ASX:KGN).

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There are some ASX shares that may be quite compelling to investors at the moment.

Businesses that are able to grow their revenue at a fast pace and increase the profit margin may be able to grow the net profit after tax at a pleasing speed.

That's why it could be worth keeping an eye on these two ASX shares:

Kogan.com Ltd (ASX: KGN)

At the current Kogan.com share price, it's valued at 24x FY23's estimated earnings according to Commsec.

The company is taking advantage of the structural shift to online shopping by consumers. 

Kogan.com can offer them a wide array of products from categories like TVs, computers, phones, cameras, drones, heating and cooling, other appliances, furniture, office supplies, toys, cars and so on. Kogan.com also has other household services such as mobile, internet, energy, credit cards, insurance and superannuation.

The ASX share also has a membership service called Kogan First which offers benefits like free shipping.

Mr Kogan, the founder of the company, has previously spoken about the benefit to the company of its growing number of people using its loyalty scheme at the FY20 result: "The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program."

The growing number of customers is helping grow Kogan.com's sales and margins.

In FY20 Kogan.com reported that its active customer base jumped 35.7% to 2.18 million. FY20 gross sales went up 39.3% to $768.9 million, gross profit rose 39.6% to $126.5 million, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 57.6% and net profit after tax grew 55.9% to $26.8 million.

The EBITDA margin has been consistently rising. In FY17 it was 4.3% and by FY20 it had grown to 9.3%.

That growth has continued into the first half of FY21. In an update last week the ASX share said that gross sales grew 96%, gross profit jumped 120% and EBITDA went up 140%. It finished with 3 million active customers.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is another ASX share that has seen rocketing revenue and even quicker profit growth.

According to Commsec, the Pushpay share price is valued at 22x FY23's estimated earnings.

The electronic donation business is experiencing even greater levels of donations passing through its systems.

In the FY21 half-year result it said that total processing volume went up by 48% to US$3.2 billion. In that same result, operating revenue went up 53% to US$85.6 million, the gross margin improved by 3 percentage points to 68% and net profit after tax went up 107% to US$13.4 million. Operating cashflow increased by 203% to US$27 million.  

One of the biggest increases in the report was the improvement of the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin by 14 percentage points from 17% to 31%.

Over the long-term the ASX share is aiming for a 50% market share of the large and medium US church sector, which may translate into US$1 billion of annual revenue.

In a recent update the company said that it was upgrading its EBITDAF guidance for FY21 again, to a range of between US$56 million to US$60 million.

It also said that it has made an initial allocation of investment resources into developing and enhancing the customer proposition for the Catholic segment of the US faith sector.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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