1 attractive ASX growth stock for 2024 and beyond

This business is building an exciting future.

| More on:
A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares

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

ASX growth stock Johns Lyng Group Ltd (ASX: JLG) is one of the most exciting S&P/ASX 200 Index (ASX: XJO) shares in my opinion.

Johns Lyng specialises in providing rebuilding and restoration services after insured events such as fire, storms and flooding.

There are four key reasons why I really like the ASX growth stock.

Strong catastrophe growth

The company has a growing catastrophe response division which is growing at a very fast rate.

It saw catastrophe revenue of $371.3 million in FY23, which was an increase of $125.3 million.

The ASX growth stock has increased its capabilities and presence, but there has also seemed to be an increasing number of damaging and expensive storms. This is increasing the volume of (potential) work for the company.

Storm activity in Australia and the US is obviously unpredictable, but it does seem to be happening regularly enough for the company to generate sizeable earnings, even if it's lumpy.

Good core growth

The company's insurance building and restoration services division is reporting impressive double-digit growth in each result – in FY23, its business as usual (BaU) revenue grew 32.2% to $775.3 million.

While we can't assume that percentage growth rate will last forever, it's compounding at a pleasing pace over time, which is making the business much bigger.

Thankfully, it seems like a scalable business, where the ASX growth stock's profit can grow faster than revenue.

FY23 total revenue rose 43.2% to $1.28 billion, total earnings before interest, tax, depreciation and amortisation (EBITDA) grew 42.9% to $119.4 million and total net profit after tax (NPAT) went up 64.3%.

International expansion

When the company first listed several years ago, it had 20 locations nationally. It is now a multi-national business with 111 Australian and New Zealand locations and over 51 locations in the US.

It wasn't too long ago that it expanded into New Zealand, opening further growth for the company.

The US is a massive market, where it could become a very sizeable player if it's able to take material market share there. It was recently appointed to the Allstate emergency response and mitigation panel, which is one of the largest insurance companies in the US.

Management has also indicated that the ASX growth stock can take its business model to other countries.

Defensive expansion

As we can see, the core offerings of the business are compelling. I also like the additional growth that the business is creating by making acquisitions in adjacent areas where it can create synergies with the existing businesses.

One of the areas where it's growing is in the strata/body corporate management space. Not only does this sector have annuity-like earnings each year, but it can also utilise Johns Lyng services where appropriate for repairs at repairs.

Another area that Johns Lyng has expanded into is fire, gas and electrical testing and compliance. Again, the earnings from this division can be annuity-like, and there are synergies that can be extracted.

I think the ASX growth stock can make numerous bolt-on acquisitions in the years ahead, which is a good tailwind.  

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

More on Opinions

Man sitting in a plane seat works on his laptop.
Opinions

Expert reveals 2 ASX stocks to sell — and 1 is a recent IPO

Toby Grimm from Baker Young shares his insights.

Read more »

An analyst wearing a dark blue shirt and glasses sits at his computer with his chin resting on his hands as he looks at the CBA share price movement today
Opinions

Expert's verdict on 3 ASX 200 shares (2 have doubled in value and the other has lost 29%)

Two of these stocks were the best performers of their sectors in FY25. Should you buy, hold, or sell?

Read more »

A male investor sits at his desk pondering at his laptop screen with a piece of paper in his hand.
Opinions

Where I'd invest in ASX shares ahead of the likely RBA rate cut

These stocks look too good to miss.

Read more »

Person pretends to types on laptop drawn in sand.
Opinions

I sold one of my oldest ASX 200 shares last week. Here's why

Why would I sell one of my longest-held stocks?

Read more »

Broker analysing the share price.
Materials Shares

Buy, hold, or sell? Broker's verdict on 3 ASX 200 materials shares

Materials was one of four market sectors that weakened in overall value in FY25.

Read more »

A person sitting at a desk smiling and looking at a computer.
Technology Shares

3 ASX 200 tech shares to buy in July: Experts

The ASX tech sector delivered outstanding returns for investors in FY25.

Read more »

A group of executives sit in front of computer screens in a darkened room while a colleague stands giving a presentation with a share price graphic lit up on the wall
Opinions

2 ASX 200 large-cap shares that this fundie is cashing in after phenomenal growth

Shaw and Partners portfolio manager James Gerrish says he knows this will be an 'unpopular call'.

Read more »

Woman and man calculating a dividend yield.
Opinions

Buy or bail? Fundie's verdict on 2 ASX 300 shares

Stuart Bromley of Medallion Financial Group provides his insights.

Read more »