Looking for growth shares to buy in August? Listed below are two that have recently been named as buys and tipped to generate strong returns for investors.
Here's what you need to know about these ASX growth shares:
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NEXTDC Ltd (ASX: NXT)
The first growth share that could be a buy in August is leading data centre operator, NextDC.
The team at Morgans is bullish on the company due to its analysts' belief that NextDC is well-placed for long term growth. This is thanks to the strong market position its world class data centre network has carved out for itself over the last decade, the industry's significant barrier to entry, and its expansion opportunities.
Morgans commented:
We retain our Add recommendation and highlight that NXT remains our preferred pick given substantial structural growth, quality management, significant barrier to entry and, in our view, improving competitive advantage with regional/edge sites.
We see a clear pathway for long-term growth, substantially higher EBITDA and material free cash flow, over the medium term.
Last week, Morgans retained its add rating with a $13.01 price target. This compares favourably to the latest NextDC share price of $11.60.
TechnologyOne Ltd (ASX: TNE)
Another ASX growth share that is rated highly is enterprise software provider TechnologyOne.
The team at Goldman Sachs is bullish on the company due to its strong position in defensive end markets such as government, health and community services, and education.
And thanks to its shift to a software-as-a-service (SaaS) model and its UK expansion, the broker believes the company is well-placed to deliver strong earnings growth over the medium term and even in the current environment.
It commented:
In our view TNE is well on its way to becoming a pure SaaS business, with high recurring revenue and expanding margins (post FY22) providing visibility into medium-term earnings growth. With a potentially challenging macro backdrop on the horizon we see TNE as offering resilient earnings given its low churn, mission critical software and defensive public sector end markets
Goldman has a buy rating and $13.30 price target on the company's shares. This compares to the latest TechnologyOne share price of $11.41.
