Brainchip Holdings Ltd (ASX: BRN) shares may be rising on Wednesday, but that doesn't change much on a 12-month basis.
Since this time last year, the embattled semiconductor company's shares have lost two-thirds of their value. This means that a $10,000 investment a year ago would be worth approximately $3,300 today.
And while a rebound could happen if the company suddenly start generating meaningful revenue, this is far from guaranteed. Especially given the incredibly fierce competition the company is facing from tech behemoths with research and development budgets measured in the billions compared to Brainchip's FY 2022 budget of US$8.4 million.
In light of this, investors may be better off avoiding Brainchip shares like the plague and focusing on ASX growth stocks with strong business models and profitable growth if they want superior returns.
But which ASX growth stocks? Listed below are three that analysts rate as buys and are tipping to deliver strong returns.
Three ASX growth stocks to buy instead of Brainchip shares
Goldman Sachs says that cloud accounting platform provider Xero Limited (ASX: XRO) is a buy and has a $141.00 price target on its shares. This implies a potential upside of approximately 40% for investors over the next 12 months.
Elsewhere, analysts at Bell Potter currently have a buy rating and a $29 price target on Lovisa Holdings Ltd (ASX: LOV) shares. This suggests an even greater upside of approximately 50% for investors.
Finally, Morgan Stanley has an overweight rating on the shares of logistics solutions company WiseTech Global Ltd (ASX: WTC) with an $85.00 price target. This implies a 35% upside from current levels.
All in all, while it would be wonderful for Brainchip to defy the odds, the chances of success as extremely small. Time and time again investors have destroyed their wealth by owning its shares and there's nothing at present to say it will be any different in the future.
And, as Warren Buffett put it: "The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule."
Focusing on quality ASX growth stocks rather than speculative moonshots should help you adhere to Buffett's rules.
