The first three months of 2022 has not been kind to some ASX growth shares. But this could be opening up some opportunities, according to leading analysts.
While the ASX may not be known for having many global leaders, there are a few small caps that are quickly expanding their international footprint.
The experts reckon these two companies — after significant price declines year-to-date — could now be opportunities:
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BWX Limited (ASX: BWX)
BWX is a natural beauty business with "market-leading" brands including Sukin, the number one natural skincare brand in Australian pharmacies, according to the company.
BWX also claims top pole positions on the US natural channel for Andalou Naturals, the number one facial skincare brand; and Mineral Fusion, the number one cosmetics brand. In addition, the company said Flora & Fauna was Australia's largest eco store and one of Australia's first B Corp businesses.
BWX recently acquired a 50.1% stake in Go-To Skincare for $89 million. In FY21, this business generated $36.8 million of revenue and $11.6 million of earnings before interest, tax, depreciation and amortisation (EBITDA). Go-To Skincare is expected to add to FY21 pro forma earnings per share (EPS) in the double digits when including $3 million of potential synergies.
The ASX share thinks that the Go-To acquisition is financially compelling and allows BWX to collaborate with one of Australia's leading skincare entrepreneurs and support its ongoing growth.
BWX continues to report overall growth. In the first six months of FY22, underlying revenue went up 26.5% to $106.9 million, while underlying net profit after tax (NPAT) rose 22.1% to $4.7 million.
It's currently rated as a buy by at least three brokers, including Citi, which has a lofty price target of $4.90. The broker thinks that the outlook is still promising for BWX.
City Chic Collective Ltd (ASX: CCX)
City Chic is a rapidly-growing retailer of clothing, footwear and accessories for plus-size women. It has different operations in different countries. City Chic is focused on Australia and New Zealand but has a growing presence globally. International operations include Evans, a UK-based company; Avenue, based in the United States; and Navabi, which is an EU-based company. It's expanding in several regions.
The ASX share is experiencing a lot of growth. In the first half of FY22, sales increased by 49.8% to $178.3 million. The company said revenue growth was supported by a strategic investment in inventory to proactively manage risks associated with global supply chain volatility and deliver continued growth.
It has launched new marketplace partnerships and expanded its brands and ranges across all geographies as part of its "world of curves" growth strategies.
In the first eight weeks of the second half of FY22, City Chic said it had continued to deliver revenue growth in the US, with UK and EU operations showing signs of recovery and getting closer to pre-acquisition levels.
In addition, the partner businesses across multiple geographies have continued to show growth. The company said it would launch new programs and new ranges with existing partners, as well as new partnerships over the rest of 2022.
City Chic is currently rated as a buy by at least five brokers, including UBS, which has a price target of $5. UBS thinks the ASX share can keep capturing more of the market.
