ASX growth shares could be smart opportunities in February 2022. Plenty of businesses have seen declines since the start of the year.
If businesses keep growing at an attractive pace, then lower prices can mean the ASX share is better value.
But, experts have been looking at the potential opportunities and have rated these two as buys:
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Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is an ASX growth share that is liked by several brokers, including UBS which has a price target of $12.20 on the company. That implies a potential increase of the Temple & Webster share price by around 50% this year.
The broker thinks that the company will be one of the beneficiaries as more people do their shopping for homewares and furniture online. Management says that the business-to-consumer market for furniture and homewares is worth $16 billion, with less than 9% of that sold online. This equates to $1.1 billion to $1.4 billion sold online.
UBS thinks that Temple & Webster can continue to grow with both its existing client base as well as through winning new customers. The FY21, the number of active customers increased by 62% year on year to 778,000. FY21's revenue per active customer increased 12% because of customers repeat buying more often and spending more when they do.
The company is regularly expanding its product range and service offering for customers. For example, it's working on its private label program which saw its share of revenue grow from 19% to 26%. It also has a highly-rated app as well as an AI interior design service which helps make shopping easier and allows customers to visualise products.
City Chic Collective Ltd (ASX: CCX)
This ASX growth share is a leader in the retail of clothes, apparel and footwear for plus-size women.
It operates through a number of different brands including City Chic, Avenue and Evans.
The business is currently rated as a buy by the broker UBS with a price target of $6 – that's around 10% higher than where it is today.
UBS has noted a number of positives from a recent trading update from City Chic.
For the 26 weeks to 26 December 2021, sales soared by 49.8% to $178.3 million despite the impact of store closures.
The company said that revenue growth has been supported by the strategic investment in inventory to proactively manage the risks associated with global supply chain volatility. City Chic's "strong" inventory position supported sales growth in the US and Australia through the critical Black Friday and Christmas trading.
The active customer base rose 23% to 1.32 million and website traffic rose 22% to 70.6 million.
The ASX growth share thinks that the strong performance in the USA shows the potential to capture and grow its share of international markets, with total Americans revenue rising 62% to $77.2 million.
City Chic said that the global opportunity for the company is stronger than ever and it continues to experience growing customer demand across its multi-channel offering.
