Fortunately for growth investors, there are many growth shares to choose from on the ASX.
But which ones could be good long-term options? Let's take a look at two that are highly rated by analysts right now:
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Treasury Wine Estates Ltd (ASX: TWE)
The team at Morgans thinks that Treasury Wine could be an ASX growth share to buy. It is the wine giant behind a range of popular brands including Penfolds, Wolf Blass, Lindeman's, and 19 Crimes.
As well as getting a boost from the removal of Chinese tariffs, the broker believes the acquisition of DAOU Vineyards could be significant to its growth prospects. It explains:
It may take some time for the market to digest TWE's acquisition of Paso Robles luxury wine business, DAOU Vineyards (DAOU) for US$900m (A$1.4bn) given it required a large capital raising. The acquisition is in line with TWE's premiumisation and growth strategy and will strengthen a key gap in Treasury Americas (TA) portfolio. Importantly, DAOU has generated solid earnings growth and is a high margin business. It consequently allowed TWE to upgrade its margins targets. While not without risk given the size of this transaction, if TWE delivers on its investment case, there is material upside to our valuation.
Morgans has an add rating and $15.03 price target on its shares. This suggests that upside of 21% is possible over the next 12 months.
Xero Ltd (ASX: XRO)
Analysts at Goldman Sachs are feeling very bullish about this cloud accounting platform provider and see it as an ASX growth share to buy.
The broker highlights that Xero has an enormous runway for growth thanks to its large total addressable market (TAM). It explains:
Xero is a Global Cloud Accounting SaaS player, with existing focuses in ANZ, UK, North American and SE Asian markets. We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM. Given the company's pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ – the stock is Buy rated. Key catalysts include: High frequency data (downloads/visitation/pricing); CEO North America strategy update and results, and potential M&A.
Goldman currently has a conviction buy rating and $180.00 price target on its shares. This implies potential upside of 26% for investors over the next 12 months.
