2 excellent ASX 200 growth shares I would love to own in my portfolio

These two could be among the most promising ASX 200 businesses.

| More on:
Increasing white bar graph with a rising arrow on an orange background.

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

Key points

  • REA Group is the owner of realestate.com.au, with a dominant market position
  • Johns Lyng is a building and restoration business that is benefiting from exposure to recovery after natural catastrophes 
  • Both of these ASX 200 growth shares have a lot of international growth potential in the US

The S&P/ASX 200 Index (ASX: XJO) growth share space was beaten-up last year, and there may be ideas hiding in plain sight for investors to take advantage of.

Higher interest rates have increased volatility on the ASX share market, while inflation is making it a tougher environment for households and some businesses.

I'm not exactly sure what share prices are going to do next, but I think it makes sense to look at businesses that have appealing long-term growth prospects, like the two below.  

REA Group Limited (ASX: REA)

This is the business that owns realestate.com.au, realcommercial.com.au and other property-related businesses in Australia, including a mortgage broking division. It also has exposure to the US property market through its stake in Move Inc. It also has a division called REA India and has exposure to other Asian markets through stakes in other websites.

The REA Group share price is still down by more than 20% from its peak in November 2021, though it has recovered from the lowest point, as we can see on the chart below.

Created with Highcharts 11.4.3REA Group PriceZoom1M3M6MYTD1Y5Y10YALL1 Nov 20212 Jun 2023Zoom ▾Jan '22Apr '22Jul '22Oct '22Jan '23Apr '23Jan '22Jan '22Jul '22Jul '22Jan '23Jan '23www.fool.com.au

What attracts me to the company is its excellent market position for realestate.com.au. The company boasts that it gets more than three times the visitors that its nearest competitor does. This strength can allow realestate.com.au to regularly implement price increases with little detrimental effect, boosting margins for the business.

There are a lot fewer listings at the moment, which is hurting the ASX 200 growth share's revenue in the short term. In the FY23 third quarter, national listings were down 12% year over year.

But, in the longer term, the amount of properties in Australia is increasing and so is the total population. I think this bodes well for its future earnings, dividend and margins.  

Johns Lyng Group Ltd (ASX: JLG)

Johns Lyng describes itself as an integrated building services business that delivers building and restoration services across Australia and the US. Its core business is focused on having the ability to rebuild and restore a variety of types of properties and contents after damage by insured events including impact, weather and fire events.

It has a number of different types of clients including major insurance companies, commercial enterprises, local and state governments, body corporates and owners' corporations, and retail customers.

I think this business could be one of the ones that can succeed if natural disaster events increase in number and financial damage.

For example, it recently won a contract from the South Australian Government to "support disaster recovery operations following extensive flooding along the Murray River."

The ASX 200 growth share is seeing a lot of growth, combined with a rising profit margin. FY23 first-half revenue rose by 71.2% to $635.6 million and net profit after tax (NPAT) increased by 83.6% to $34.1 million. It grew the interim dividend by 66.7%.

Johns Lyng is expecting more growth thanks to a number of factors, including its recent contract wins. It's also predicting it will win new clients as well as continue to roll out and work on cross-selling with its strata services. The ASX share is also actively looking at more acquisitions.

The business is growing through many different avenues, and there is plenty of potential for the company to grow in other countries.

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 positions in and has recommended Johns Lyng Group. The Motley Fool Australia has recommended Johns Lyng Group and REA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

Person pointing at an increasing blue graph which represents a rising share price.
Growth Shares

What to buy now with the ASX at a record high

Analysts think these shares could still rise strongly from current levels.

Read more »

A young man looks at a stylised investment graph superimposed on an exterior office building backdrop.
Growth Shares

Where to invest $10,000 in ASX 200 stocks today

Analysts think these high-quality shares are in the buy zone for investors right now.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Growth Shares

Two ASX industrials shares with buy recommendations

One broker believes these growth shares are set to rise.

Read more »

Man smiling at a laptop because of a rising share price.
Growth Shares

I think these 2 exciting ASX growth shares are buys today

These stocks could deliver big returns.

Read more »

a man in a business suit and carrying a laptop stands smiling with hand in pocket outside a large office building in a city environment.
Growth Shares

Buy these 2 impressive ASX 200 shares in July: experts

Experts are bullish about these two businesses.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Growth Shares

3 ASX 200 shares set to dominate the next decade

Let's see why these shares could be great long term picks for Aussie investors.

Read more »

A group of businesspeople clapping.
Growth Shares

3 ASX growth shares with 10-year compounding potential

Let's see which shares are being tipped as buys for growth investors.

Read more »

Woman happy and relaxed on a sofa at a shop.
Growth Shares

Are these 2 top ASX growth shares buys?

Are these high-flyers still buys?

Read more »