These are my top ASX 200 share picks for growth right now

I'm bullish about these two stocks.

| More on:
A young boy sits on his father's shoulders as they flex their muscles at sunrise on a beach

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

sdf

I believe investing in S&P/ASX 200 Index (ASX: XJO) shares with strong growth potential can deliver excellent returns, but only if we invest at the right price. In this article, I'll discuss two possibilities I'm excited about today.

Both companies are trading significantly below their recent all-time highs, so I think they're looking good value, considering they continue to grow their underlying operations and increase their underlying profitability.

I think both of these stocks can become significantly larger in the years ahead. Here's why.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel Management is one of the largest operators in the world. It has a commendable market share in the United States and Australia. The company also has operations in other key regions including Asia and Europe.

Corporate Travel aims to double its FY24 profit organically by FY29 at a compound annual growth rate (CAGR) of 15%, with acquisitions on top of that.

It aims to grow its revenue by at least 10% per annum over the next five years by winning new clients and retaining a high proportion of existing clients, and they may deliver increased activity themselves.

The company aims to limit cost growth to just 5% per annum, with revenue per full-time employee equivalent (FTE). The ASX 200 growth share hopes that earnings before interest, tax, depreciation and amortisation (EBITDA) could grow at a CAGR of 15% per annum over five years.

According to the estimate on Commsec, the Corporate Travel Management share price is valued at just 12x FY26's estimated earnings.

Xero Ltd (ASX: XRO)

Xero is one of the world's leading cloud accounting software providers, with millions of subscribers.

There are several tailwinds for the ASX 200 growth share. It's growing the number of subscribers and increasing monthly prices, which can help EBITDA, net profit, and cash flow. Ongoing worldwide digitalisation is also a strong tailwind.

The HY24 result saw Xero grow operating revenue by 21% to $800 million.

The ASX 200 growth share is looking to balance profit and growth from now on – I think if Xero can demonstrate how profitable its underlying operations are, then investors could get excited. Xero already has a gross profit margin that is creeping towards 90%.

The nature of software means that it's very cheap to replicate, and the company can expand quickly. It has grown into a number of countries, offering pleasing growth potential in places like South Africa and Canada.

In time, I think Xero could become one of the most profitable companies outside of banking and mining because of its rapid growth and global growth outlook.

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 Corporate Travel Management and Xero. The Motley Fool Australia has positions in and has recommended Corporate Travel Management and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

ASX 200 retail shares a woman smiles over the top of multiple shopping bags she is holding in both hands up near her face.
Opinions

Up 90% in a year, is it too late to buy Zip shares?

Should investors buy this stock now or wait until later?

Read more »

A trio of ASX shares analysts huddle together in an office with computer screens all around them showing share price movements
Opinions

2 of the best ASX 200 shares to buy right now

I think these stocks are excellent buys for the long-term.

Read more »

Concept image of a businessman riding a bull on an upwards arrow.
Opinions

I'm very bullish on these 2 ASX stocks

I think these are two of the best ASX investments money can buy.

Read more »

Young businesswoman sitting in kitchen and working on laptop.
Opinions

Should I buy Berkshire Hathaway or Soul Patts shares?

Both have been stand out investments over the long term.

Read more »

A photo of a young couple who are purchasing fruits and vegetables at a market shop.
Opinions

Here are 2 of the ASX's most hated shares. Which should I consider buying?

Could today's dogs be tomorrow's stars?

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.
Opinions

Where I'd invest $5,000 into ASX shares today

I’m excited by what these stocks can achieve.

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

What are Soul Patts shares worth?

This company has delivered strong gains. But what is its intrinsic value?

Read more »

Two funeral workers with a laptop surrounded by cofins.
Opinions

2 exciting ASX 300 shares on sale right now

I’m bullish about these exciting businesses.

Read more »