Are we heading for a global recession in 2023 or is the worst already behind us? With so many conflicting expert opinions floating around, it's impossible to know with any certainty.
But what we do know for sure is that the stock market has never NOT bounced back to reach new record highs following its down periods.
Whilst a rebound might not happen next week or next month, if history is anything to go by, it will definitely happen.
So, we asked our Foolish contributors which ASX growth shares they think are worth jumping on now to make the most of the coming bounce back.
Here is what the team came up with:
7 ASX growth shares for a bounce back (smallest to largest)
- Temple & Webster Group Ltd (ASX: TPW), $516.22 million
- Jumbo Interactive Ltd (ASX: JIN), $887.81 million
- Life360 Inc (ASX: 360), $1.02 billion
- Webjet Limited (ASX: WEB), $2.34 billion
- Altium Limited (ASX: ALU), $4.61 billion
- Domino's Pizza Enterprises Ltd (ASX: DMP), $5.67 billion
- Xero Limited (ASX: XRO), $10.3 billion
(Market capitalisations as of 21 December 2022)
Why our Foolish writers love these ASX shares
Temple & Webster Group Ltd
What it does: Temple & Webster is Australia's largest pure-play online retailer of furniture and homewares. It sells over 200,000 products from hundreds of suppliers, and it also has a drop-ship model, where products are sent directly to customers by suppliers. This enables "faster delivery times, reduces the need to hold inventory, and allows for a larger product range".
The company also has a private label range and a website called The Build that is focused on home improvement products like flooring, cabinets, plumbing, lighting, curtains, and so on.
By Tristan Harrison: The Temple & Webster share price has sunk by over 60% in 2022 which, in my opinion, makes it look like pretty great value.
While lockdowns 12 months ago make it difficult for the company to beat its year-over-year numbers, it is expecting to return to "double-digit growth during this financial year".
Temple & Webster is also focused on unit economics and profitability. It's expecting an earnings before interest, tax, depreciation and amortisation (EBITDA) profit margin of between 3% and 5%. Longer term, margins could improve thanks to more private label sales, marketing and variable cost efficiencies, and scale benefits for key costs like freight and cost of goods.
Adoption of digital shopping for home items in Australia is predicted to rise from its current level of 17% of the whole market. In the United Kingdom, online shopping for furniture and homewares was around 30% of the entire market in 2021. This suggests considerable potential upside for online retailers like Temple and Webster over time.
Motley Fool contributor Tristan Harrison does not own shares of Temple & Webster Group Ltd.
Jumbo Interactive Ltd
What it does: Jumbo Interactive operates an online platform for the sale of lottery tickets and fundraising activities. The company's platforms are now active across Australiasia, the United Kingdom, and Canada – reaching 4 million active players.
By Mitchell Lawler: This year has not been kind to the Jumbo Interactive share price, despite rather solid results. Since the beginning of 2022, shares in the online lottery operator have tumbled by around 26%.
But, in my mind, Jumbo is in the strongest position it has ever been. The company completed its acquisition of StarVale in November, further strengthening its position in the UK. The deal marks another display of management's ability to deploy its profits to make earnings-accretive acquisitions globally.
This is a company that generates post-tax profits at a 30% margin and holds nil debt. If the Jumbo management team can continue to efficiently use capital to expand operations, today's share price could look cheap in the event of a market rebound.
Motley Fool contributor Mitchell Lawler owns shares of Jumbo Interactive Ltd.
Life360 Inc
What it does: Life360 is the technology company behind the eponymous Life360 freemium mobile app, which boasts 47 million monthly active users. It offers users features that range from communications to driving safety and location sharing.
By James Mickleboro: It has been a tough year for the Life360 share price. The market's sudden aversion to loss-making tech companies means that the company's shares are down almost 50% year to date. This is despite Life360 expecting to more than double its revenue to between US$225 million and US$240 million this calendar year.
The good news is that its loss-making days are almost over, with management expecting the company to be cash flow positive next year. In the meantime, Life360's cash balance of approximately US$85 million is materially more than needed to get it through to breakeven.
In light of this, I think now is the time to focus on the company's very strong, long-term growth potential in a huge US$12 billion total addressable market, globally. I also suspect a re-rating of Life360 shares could happen when the market rebounds and the company achieves positive cash flow.
Motley Fool contributor James Mickleboro owns shares of Life360 Inc.
Webjet Limited
What it does: Most Australians likely know Webjet as an online travel agency, but the company's business covers much more ground than that. Perhaps its most notable additional foray is its WebBeds business-to-business offering – a provider of accommodation services to the travel industry.
By Brooke Cooper: The Webjet share price has outperformed in 2022, rising almost 20% year to date to trade at $6.18 at the time of writing. However, that's still around 37% lower than it was prior to the onset of the COVID-19 pandemic.
Fortunately, Goldman Sachs has tipped the stock to regain notable ground. The broker believes Webjet is a conviction buy, recently slapping it with a $6.90 price target.
Such confidence comes as the company exits the pandemic far larger than it entered. And that growth might just be the start.
As my Fool colleague reported last week, Goldman Sachs expects Webjet's earnings to boast a six-year compound annual growth rate (CAGR) of 15.3%.
Motley Fool contributor Brooke Cooper does not own shares of Webjet Limited.
Altium Limited
What it does: Altium is a multinational software company that focuses on electronics design systems for 3D printed circuit board (PCB) design and embedded system development.
By James Mickleboro: Another ASX growth share I think could be a buy right now is Altium. Although its shares have fared a lot better than some other tech stocks in 2022, they are still down meaningfully compared to the benchmark S&P/ASX 200 Index (ASX: XJO).
And when the market rebounds, I think Altium could rebound along with it. Particularly given the company's very bright long-term growth prospects.
Thanks to Altium's leadership position in the industry, and favourable tailwinds such as growth in demand for the Internet of Things and artificial intelligence, management is aiming to grow revenue to US$500 million by 2026 with an EBITDA margin of 38% to 40%.
This will be more than double FY2022's revenue of US$220.8 million and an improvement on FY2023's EBITDA margin guidance of 35% to 37%. I expect this to underpin strong profit growth over the coming years, which could help drive Altium shares higher.
Motley Fool contributor James Mickleboro owns shares of Altium Limited.
Domino's Pizza Enterprises Ltd
What it does: Domino's is Australia's largest pizza chain, offering delivery, takeaway, and dine-in restaurant services nationally. It also operates internationally, with a total of over 2,800 stores across 10 markets.
By Matthew Farley: The Domino's Pizza share price has dropped almost 45% year to date, but some experts believe this lower price now offers great value for investors.
This includes one broker from Morgans who slapped Domino's shares with a price target of $90 earlier this month. That makes for a potential 38% upside from the current share price, at the time of writing.
The broker went on to say that Domino's has been battling with the headwinds of lower sales and a higher cost basis for its products. However, these issues were described as being "transitory in nature". If this proves to be correct, the company's revenues and margins could be poised to improve significantly, moving forward.
Motley Fool contributor Matthew Farley does not own shares of Domino's Pizza Enterprises Ltd.
Xero Limited
What it does: Xero is a provider of cloud-based accounting software. The platform helps small-business users efficiently manage the financial and regulatory requirements of running their companies.
By Sebastian Bowen: Xero shares have had a very rough year or so. This was an ASX 200 stock that was trading at more than $150 a share back in November 2021, more than double the current price. So, you'd think that Xero's business has been facing some kind of calamity.
Well, not quite. Back in May, Xero reported that it had grown subscribers by 19%, revenues by 29% and earnings by 11% over the 12 months to 31 March 2022.
More recently, Xero reported a 30% rise again in revenues covering the six months to 30 September 2022, with earnings up 11% and subscribers growing by 16%.
If there is a stock market rebound next year, I think it's likely that investors will find a new appreciation for this ASX growth share.
Motley Fool contributor Sebastian Bowen does not own shares of Xero Limited.
