Why I think these 2 ASX 300 stocks will beat the market in 2025

I'm very optimistic about a few ASX growth shares.

| More on:
Young boy in business suit punches the air as he finishes ahead of another boy in a box car race.

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

The S&P/ASX 300 Index (ASX: XKO) is a fertile hunting ground to find businesses that are growing quickly but still have plenty of time to go before they reach full maturity.

But there are a few ASX 300 stocks I'm backing to beat the wider market over the next 12 months and beyond.  

Typically, businesses that are growing revenue at a fast pace are more likely to beat the market, in my view. It helps if those businesses have a large addressable market to grow into. Another positive would be if they can grow their profit margins as they become bigger.

I believe the ASX 300 stocks below are appealing options, which is why I own them in my own portfolio.

Lovisa Holdings Ltd (ASX: LOV)

I'd describe Lovisa as one of the most global companies on the ASX. It sells affordable jewellery which is targeted at younger shoppers. At the last count, it had 927 stores in 49 markets/countries.

The business has more than 200 stores in Australia and New Zealand. Excitingly, it has the potential to significantly expand its global store network because it has a presence in countries with much larger populations than Australia, such as the USA, the UK, Germany, Italy, China, and Vietnam. I think it can add hundreds of stores to its network in the coming years.

It continues growing at a pleasing pace despite the challenging economic environment. In the first 20 weeks of FY25, total sales grew by 10% year over year.

The FY24 result demonstrated the strength of its business model, with revenue growth of 17% and net profit after tax (NPAT) growth of 20.9%.

According to the Commsec forecast, the Lovisa share price is valued at 34x FY25's estimated earnings. I believe the company's sales growth could improve if the economic situation improves following interest rate cuts worldwide.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is an online retailer of homewares, furniture, and some home improvement products.

It already sells more than 200,000 products, most of which are shipped to customers directly by suppliers. This reduces the inventory and capital the ASX 300 stock needs to have to service the sales. The business' capital-light model allows it to generate strong cash flow.

The ASX 300 stock aims to reach $1 billion in annual sales between FY26 and FY28, thanks to a combination of at least $800 million in core furniture and homewares sales and at least $200 million in sales from its growth plays, including business-to-business and home improvement sales.

I'm excited by the company's potential to grow market share significantly as e-commerce adoption by Aussies continues, younger cohorts enter their higher-spending stage(s) of life, and a high level of marketing reaches more customers.

As an online business, the company is benefiting from AI usage, both internally and with customer-facing solutions. This boosts customer conversion and provides cost-based benefits.

With the ASX 300 stock getting bigger, its fixed costs are being spread across more sales, which is boosting margins. Its fixed costs were 11% of sales in FY24, and it's aiming to have fixed costs of less than 6% of sales by FY28.

I think this company has a very exciting future if it can continue gaining market share.

Motley Fool contributor Tristan Harrison has positions in Lovisa and Temple & Webster Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa and Temple & Webster Group. The Motley Fool Australia has recommended Lovisa and Temple & Webster 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

Young male investor smiling looking at laptop as the share price of ASX ETF CRYP goes higher today
Opinions

Why I just bought this 5.2%-yielding ASX dividend stock and plan to buy even more

This business is one of my favourites for dividends and total returns.

Read more »

A young female investor with brown curly hair and wearing a yellow top and glasses sits at her desk using her calculator to work out how much her ASX dividend shares will pay this year
Opinions

Why I'm still investing in ASX shares during tariff uncertainty

There are a few reasons why I plan to continue investing even during uncertainty.

Read more »

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

Why I'm buying more of these 2 ASX stocks ahead of earnings season

I've been excited about buying these investments.

Read more »

Business women working from home with stock market chart showing per cent change on her laptop screen.
Opinions

1 month until ASX earnings season begins: how I'm preparing

It’s almost reporting time. Here’s what I’m looking at.

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Opinions

Potential buys: 2 compelling ASX shares I like

These ASX shares have an exciting future.

Read more »

Smiling man at the wheel of a car.
Opinions

2 ASX auto stocks to buy — and 1 to sell: experts

Analysts have shared fresh insights into 3 ASX auto shares -- and not all of them are in the buy…

Read more »

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

ASX retail share whose 'fundamentals have deteriorated significantly': expert

Christopher Watt from Bell Potter explains his views on this former market darling.

Read more »

A young woman looks at something on her laptop, wondering what will come next.
Opinions

3 soaring ASX 200 large-cap shares that are now overvalued: experts

Two experts say this trio of ASX 200 large-caps have overshot and it's time to take some profits.

Read more »