2 buy-rated ASX shares with big growth plans

These businesses are growing quickly and could leading contenders.

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The two ASX shares in this article could be leading ideas to think about as long-term ideas because of their plans that involve international growth.

Not every business is planning to expand geographically, but companies that do can materially increase their addressable market.

With that in mind, here are two ASX growth shares with major plans:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is an ASX retailer that sells a wide variety of baby and toddler products including prams, toys, clothes, furniture and so on.

The company has various plans to deliver profit growth and market share growth.

It's investing in digital to deliver the best possible customer experience across channels. Baby Bunting is planning to invest to grow its market share from its core business. Baby Bunting wants to achieve growth from 'new markets' and aim for profit margin improvement.

New Zealand is an important part of Baby Bunting's longer-term growth plans. It is aiming to open its first two stores in the country before the end of the financial year. Over time, Baby Bunting sees a network there of at least ten stores. In FY22 it's also planning to open between six to eight new Australian stores.

Another area of growth for the ASX share is the amount of private label and exclusive products sold. In FY22 to its AGM date, 44.3% sales were from this source. The long-term goal is for these products to make up 50% of sales. This is helping the gross profit margin continue to rise.

In FY21, total sales increased 15.6% and pro forma net profit jumped 34.8% to $26 million. FY22 sales had increased by another 1.5% despite more than half of its stores being subject to lockdowns. Online sales were up 37.7% in the year to date.

The ASX growth share is rated as a buy by the broker Morgan Stanley with a price target of $6.90.

Redbubble Ltd (ASX: RBL)

Redbubble describes itself as the operator of two leading global online marketplaces – Redbubble.com and TeePublic.com. It enables artists to sell "uncommon designs on high-quality, everyday products such as apparel, stationery, housewares, bags, wall art and so on. It is steadily adding more product categories.

The ASX growth share generates its marketplace revenue from all over the world, though North America represented 69% of its FY22 first quarter sales. The EU (13%), the UK (9%) and ANZ (8%) represented the other major markets.

Excluding masks, Redbubble is expecting marketplace revenue in FY22 to be slightly above underlying FY21 marketplace revenue of $497 million.

In the next few years, it's aiming to reach $1.25 billion of marketplace revenue.

Redbubble is planning to invest in multiple areas to grow the business in the medium-term, which likely means the earnings before interest, tax, depreciation and amortisation (EBITDA) margin will be in the mid-single digits.

However, the ASX share said in its recent trading update:

The business remains confident and excited about the medium-to-longer-term opportunity to grow strongly its online marketplaces for consumers and extend Redbubble's global market leadership as the largest platform for independent artists.

Morgan Stanley currently rates Redbubble as a buy, with a price target of $6.50.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting. 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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