3 Companies with Huge Growth Opportunities
By: Regan Pearson
Recently I've been digging into companies I think could have big growth opportunities in the years ahead and three in particular have stood out:
1. Xero Limited, ASX: XRO
Cloud accounting platform Xero already has a strong history of growth, but a huge opportunity remains to win new subscribers in the UK market.
Xero had 312,000 subscribers in the UK at 31 March 2018 and Managing Director of Xero's UK, Europe, Middle East and Africa business Gary Turner has told New Zealand's Business Desk this number could triple over the coming years.
"We're still at the beginning and there is no reason why the Xero customer base can't be over a million customers in the next period" – Gary Turner.
A number of big changes including the looming Brexit process and a significant mandate from the UK government to 'Make Tax Digital' by 2020 will be natural drivers and keep subscriber numbers climbing.
2. Senex Energy Ltd, ASX:SXY
Mid-tier, on-shore oil and gas producer Senex Energy is another company I see with huge growth opportunities ahead.
Although production has waned over the last 3 years following the down-turn in oil prices, that is set to reverse rapidly upwards.
Senex is preparing to develop resources in the Surat Basin and Cooper Basin through two key projects: the Western Surat Gas Project and Project Atlas. There are a number of tailwinds which will support the projects:
- Expected gas supply shortages for east coast states bringing strong demand and pricing
- Strengthened oil pricing
- Strengthening global LNG demand
- Significant 2P energy reserves (83.9 million barrels of oil equivalent as of 2017)
The Western Surat Gas Project includes a 20-year gas sales agreement with the GLNG project operated by Santos Ltd, ASX: STO. However this growth comes at a cost and Senex is expecting to spend up to $100 million on capital expenditure in the 2018 financial year.
3. CSL Limited, ASX: CSL
If I could only own one healthcare stock for the next decade, it would be a toss-up between CSL Limited and Fisher & Paykel Healthcare Corp Ltd, ASX: FPH.
Both companies exemplify quality R&D investment and production. However I think CSL will continue to thrive with strong pricing power and the ramping up of influenza vaccine business Seqirus which it acquired in 2015. CSL has grown reported revenue at a compounded annual rate of over 6% over the last 5 years which I think could rise into double digits going forward.
Of the three companies I like Xero's prospects the most. I think the company has a strong chance of success in the UK which it will be able to lever and transfer to new markets in the years to come.
I'd also like to call your attention to an ASX small cap that's up 285% with no sign of stopping…
This Australian company has developed a state of the art device that's revolutionizing hospitals all over the world. Even better, this device is so profitable that the company rakes in 90% margins. That's a lot of cash. So no wonder the stock's up 285% since 2008.
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