Reporting season is nearly here, so I'm going to outline why the three ASX growth shares below could be worth buying.
I think my three choices could positively surprise the market:
Altium Limited (ASX: ALU)
Altium is one of the world's leading electronic PCB software businesses. It's trading on a cheaper forward price/earnings ratio compared to most of its ASX peers like WiseTech Global Ltd (ASX: WTC) and Afterpay Touch Group Ltd (ASX: APT).
Investor reaction to today's Afterpay update shows that investors can still get excited by the tech businesses even with their elevated valuations and the last painful few months.
I think Altium could positively surprise the market with its progress in getting some Chinese users to pay for the software. Profit margin improvement may also be a positive catalyst.
Over the next decade I think Altium could turn into one of the best blue chips on the ASX.
It's currently trading at 46x FY19's estimated earnings, which isn't exactly cheap.
Propel Funeral Partners Ltd (ASX: PFP)
Propel is the second largest funeral business in Australia and New Zealand. Its share price has drifted lower in recent months due to a rising US interest rate and a fall in the Australian death rate.
I am thankful that less Australians are passing away, however it's likely that the mortality rate will return to the trend. A benign flu season was the main factor, but Healius Ltd (ASX: HLS) recently said "We are starting to see volumes moving back up towards more normal levels" which may suggest Propel may see a return to normal levels too, which it may be able to announce next month.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050.
Propel is trading at under 20x FY19's estimated earnings.
Citadel Group Ltd (ASX: CGL)
This leading IT business is a provider of secure information management systems for important industries like health, defence, security and education where demand is unlikely to fall even in economic downturns.
Citadel enters into multi-year contracts with its clients, meaning it should generate reliable cashflow each year. Additional contract wins could boost earnings further.
Its growth rate is impressive for its fairly low valuation and any international expansion could be an important catalyst for share price growth in the coming months.
Citadel is trading at 22x FY19's estimated earnings.
Foolish takeaway
All three of the above shares could make good long-term investment choices at the current prices. I think Altium could be the one most likely to surprise the market next ,pnth, as it has managed to impress many times over the past few years, but of course there's a chance it could disappoint as well.
