If you have room in your portfolio for some new additions in October, then you might want to consider the two ASX growth shares listed below.
Both have recently been named as buys by experts and tipped to climb meaningfully higher from current levels. Here's what you need to know:
Image source: Getty Images
IDP Education Ltd (ASX: IEL)
The first ASX growth share that has been named as a buy is language testing and student placement company IDP Education.
IDP is the co-owner of the IELTS test, which is the English test that is trusted by more governments, universities, and organisations than any other. This puts it in a great position to benefit from increasing demand for language testing, particularly given its strong position in key markets like India.
Goldman Sachs is a big fan of the company and is expecting strong underlying system demand to result its stellar earnings growth through to FY 2025. It commented:
IEL is trading c.40% below its 5-yr average P/E premium to the ASX200 Industrials with a forecast 37% FY22-25E EPS CAGR, we remain Buy-rated. We have upgraded EPS in FY23/FY24 by 1.7%/0.8% on the back of the stronger FY22 result, continued strong revenue growth and margin expansion. The balance sheet is in a resilient position with c.A$40mn of net cash to facilitate any bolt-on acquisitions or ramp up in organic investment in new offices and technology.
Goldman has a buy rating and $36.00 price target on the company's shares.
Life360 Inc (ASX: 360)
Another ASX growth share that analysts have tipped as a buy is Life360.
Its is a technology company that operates in the digital consumer subscription services market, with a focus on products and services for digitally native families.
The company's flagship product is the Life360 app, which has a whopping 40 million+ active users. It offers families features such as communications, driver safety, and location sharing.
Analysts at Bell Potter are very positive on the company. This is due to its huge total addressable market and material cross selling opportunities following recent acquisitions. It commented:
Life360 has the potential to leverage its large and growing user base to enter new markets and disrupt the legacy incumbents. An example is roadside assistance where Life360 launched a subscription-based product called Driver Protect which disrupted the market and helped enable monetisation of its user base. Other markets Life360 could potentially enter include insurance, item & pet tracking, senior monitoring, home security and/or identity theft.
And while Bell Potter acknowledges that Life360 isn't profitable yet, which has been weighing on its shares this year, it isn't concerned by this. The broker points out that the company is "expected to be operating cash flow positive from 4Q2023 and has more than sufficient cash to fund its operations till then."
In light of this, its analysts see the weakness in the Life360 share price this year as a buying opportunity for investors. Bell Potter has a buy rating and $8.23 price target on its shares.
