3 'compelling' ASX growth shares ECP is backing (You won't believe #2)

Hub24 and Domino's Pizzas might be obvious picks, but how about this other one that the fund is invested in?

| More on:
three businessmen high five each other outside an office building with graphic images of graphs and metrics superimposed on the shot.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In turbulent times such as now, everyday investors could find it hard to come up with conviction on potential stock purchases.

That's why it's worth examining professionally operated funds to see which stocks they are proudly holding for long-term growth.

Here are three ASX shares that the team at the ECP Growth Companies Fund is loving at the moment:

'Outlook remains compelling'

Financial services platform Hub24 Ltd (ASX: HUB) had a fantastic February, gaining more than 9%. It has since moderated a touch to be 3.75% up for the year so far.

Created with Highcharts 11.4.3Hub24 PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

The ECP analysts, in a memo to clients, urged investors to keep their eyes on the ultimate prize — long-term growth.

"The share price has been volatile as short-term investor sentiment has remained focused on the cadence of in-flows to wealth platforms, with advisors regaining client consolidation momentum as markets have stabilised."

The business has kicked off 2023 in a positive vein, according to the ECP team.

"Hub24 reported a strong start to net flows in 3Q FY23 and reiterated guidance for FY24 funds under management."

ECP sees a growth stock with alluring fundamentals in Hub24.

"With stable revenue margins and operating leverage incrementally flowing through, the outlook remains compelling for Hub24."

Pariah turned angel?

Software maker Nuix Ltd (ASX: NXL) is as close as any stock can get to the term "pariah" on the ASX.

The company debuted on the bourse with tremendous hype in December 2020. Within a few weeks the share price exceeded the $11 mark, as investors climbed over each other for a piece of the action.

But then within just a few months in 2021, it all came crashing down.

A series of governance failures, and a realisation that it would not hit forecast numbers contained in the IPO prospectus, saw shareholders run from the burning building.

Created with Highcharts 11.4.3Nuix PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

The share price has been as low as 52 cents over the past year, as Nuix became an example of how fast investors could get burnt.

But amazingly, the stock has risen 73% year to date.

The ECP team noted that the company recently won a stock ownership court case brought on by former chief executive Kervin Sheehy.

"The share price rallied significantly on the back of this, as the market was discounting around $60 million of market capitalisation from the company, expecting the company to lose the case," read the memo.

"Nuix has already been awarded costs in the matter, and will defend the appeal."

Pizzas don't sell themselves

Unlike the other two stocks, Domino's Pizza Enterprises Ltd (ASX: DMP) has been in a downward spiral this year. 

The pizza retailer has already lost over a quarter of its valuation in 2023.

Created with Highcharts 11.4.3Domino's Pizza Enterprises PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

ECP analysts said that the business had failed to execute an appropriate pricing strategy.

"[This] saw volumes decline toward the end of the year," read the memo.

"The inflationary environment has been challenging, particularly in Europe and Asia."

However, the team still has faith in the long-term capital growth opportunity for Domino's shares.

"Going forward, the company has introduced their Flexible Voucher, which has proven to have some early success and will be key to improving its operating performance in 2H."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Domino's Pizza Enterprises and Hub24. The Motley Fool Australia has positions in and has recommended Hub24. The Motley Fool Australia has recommended Domino's Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

A couple cheers as they sit on their lounge looking at their laptop and reading about the rising Redbubble share price
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

two men smiling with a laptop in front of them, symbolising a rising share price.
Broker Notes

These ASX 200 shares could rise 25% to 60%

Analysts think these shares are top buys and could rise materially.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Broker Notes

Bell Potter says this growing ASX 200 stock can rise over 40%

Big returns could be on the cards for buyers of this stock.

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Up 23% today, why Macquarie forecasts this ASX 200 mining stock could rocket another 33%

Macquarie forecasts more outsized gains to come for this surging ASX 200 mining stock.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

ASX banking sector: Is it time to consider a regional bank?

The big 4 banks are widely considered to be overvalued.

Read more »

A share market analyst looks at his computer screen in front of him showing ASX share price movements
Broker Notes

'Materially undervalued': Brokers name 3 ASX shares ripe for investment

Looking for some FY26 investment inspiration?

Read more »

Happy friends at a party enjoying pizza, symbolising the Domino's share price.
Broker Notes

Buy, hold, or sell Domino's Pizza shares after shock CEO exit? Here's what the experts say

The Domino's share price has been recovering after losing a quarter of its value last Wednesday.

Read more »