Looking for a growth share or maybe two to buy? If you are, you may want to look at the two listed below.

Here's why these ASX growth shares are rated highly right now:

Temple & Webster Group Ltd (ASX: TPW)

The first ASX growth share that analysts are bullish on is Temple & Webster.

It is Australia's leading online retailer of furniture and homewares. It operates largely through a drop-shipping model, which is complemented by a private label range sourced directly by management.

While a weaker than expected trading update with its half-year results spooked the market last month, Goldman Sachs believes the selloff that ensued has created a buying opportunity. Particularly given its belief that the soft update reflects "the lapping of omicron rather than a deterioration in underlying trends."

In light of this, the broker has put a buy rating and $6.50 price target on the company's shares. It adds:

The long term structural growth opportunity is unchanged: we forecast a 21% 10-yr EBITDA CAGR driven by consolidation of market share and growing online penetration.

Xero Limited (ASX: XRO)

Another ASX growth that has been named as a buy is Xero. Xero is a global small business platform which provides its 3.3 million global subscribers with a core accounting solution, as well as payroll, workforce management, expenses and projects solutions.

In addition, Xero provides access to financial services, an ecosystem of more than 1,000 connected apps, and more than 300 connections to banks and other financial institutions.

Citi is a fan of the company and is forecasting very strong growth over the coming years. And while the current operating environment is not ideal, the broker believes that things are actually better than expected. It commented:

Our analysis of company insolvency and formation data points to normalising trends, with insolvency increasing and new business formation slowing in the Dec quarter across most markets except for the UK. However, except for NZ, the increase in insolvencies in 2H23e to date is tracking below our 2H23e churn assumptions. Website visits and app downloads are slowing across most markets; however, we see this as less correlated with subscriber growth but do note that add-on app downloads (Xero Me, Planday) are seeing good growth, which is positive for ARPU.

Citi has a buy rating and $92.40 price target on the company's shares.

The post Analysts say these exciting ASX growth shares are buys this month appeared first on The Motley Fool Australia.

Are you wanting to add a growth share or two to your portfolio?

If you are, then analysts at Goldman Sachs think the two listed below could be worth considering. Here's why these growth shares are rated as buys:

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat could be an ASX growth share to buy according to the broker. It is a gaming technology company best-known for its industry-leading poker machines. But it also has a lucrative digital business, named Pixel United, and recently expanded into the merging real money gaming market with a deal with BetMGM.

In addition, management invests heavily in research and development each year to cement its leadership position and position it for growth.

Goldman Sachs is confident in the company's outlook and has put a buy rating and $42.80 price target on its shares. It commented:

We view ALL as strategically the most diversified, holding a top 3 spot in slot machine sales in the US, having a strong digital gaming offering, and now launching into the growing iGaming market. While short-term headwinds persist in the form of supply chain, spend for longer term growth etc., we believe that the longer-term growth outlook remains strong.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX growth share that Goldman Sachs is bullish on is Temple & Webster. It is Australia's leading pure-play online retailer of furniture and homewares.

Goldman currently has a buy rating and $6.50 price target on the company's shares.

The broker believes the company is well-placed to be a big winner from the shift to online shopping. Especially given that the shift is still in its infancy for Temple & Webster's target categories. It commented:

We believe TPW is well positioned in the upcoming cycle to continue to grow market share, despite a weaker macro environment. In our view TPW is best placed to be a winner in a category that favours scale players, requires a specialised approach to e-commerce, and has higher barriers to entry vs. other retail categories; and greater focus on costs is a sensible strategy to balance near-term profitability with growth.

The post 2 ASX growth shares to buy: Goldman Sachs appeared first on The Motley Fool Australia.

Are you interested in adding some ASX growth shares to your portfolio? If you are, you may want to look at the share listed below that Goldman Sachs has on its conviction list.

Here's what you need to know about this buy-rated growth share:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster could be an ASX growth share to buy. It is Australia's leading online furniture and homewares retailer through the eponymous Temple & Webster website. It is also developing an online Bunnings competitor known as The Build.

While it is unlikely that Bunnings will be quaking in its boots over The Build, the bricks and mortar furniture and homewares market may be nervous about the prospect of losing market share to Temple & Webster in the future.

Goldman Sachs is very positive on the company's future and believes post-results weakness has created a buying opportunity for investors. It commented:

We think the negative share price reaction (-27%) is overdone, in response to a weaker than expected trading update for the first five weeks of the year which we view as largely reflecting the lapping of omicron rather than a deterioration in underlying trends. We view the balance towards profitability as a sensible shift given near term uncertainty; that said we expect the business to pivot back to active customer growth in FY24 which should drive market share gains.

Post today's sell off, we believe the market is either pricing in i) a significant downturn with TPW trading at a bottom of the cycle EV/GP multiple (2.1x FY24E vs. W trading on 2.5x); or ii) a very material impairment to its long term growth opportunity, which we saw no evidence of in the update today.

Goldman has conviction buy rating and $6.50 price target on its shares. Based on the current Temple & Webster share price of $3.53, this implies potential upside of 84% over the next 12 months.

The post This ASX growth share has a massive 84% upside: Goldman Sachs appeared first on The Motley Fool Australia.

There are some All Ordinaries (ASX: XAO), or All Ords, ASX shares that have fallen heavily over the past year or so. I think that some of these beaten-up names could be some of the best opportunities to buy for a two-year or three-year timeframe.

The outlook for some ASX shares is looking a bit tougher than in 2021. However, I don't believe that the poor conditions are going to last forever, which I think is how businesses are sometimes priced during a sell-off like the current period.

While retail is not the most defensive sector, I think there is the potential for investors to pick up shares at cyclical lows, and then ride the recovery back up again, though a turnaround could take a bit of time. That's where being patient is a very useful trait. By 2025, I think both of these names can deliver share price growth of at least 30% as market sentiment returns and their growth plans are carried out.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is one of the leading online-only homewares and furniture retailers.

The Temple & Webster share price has fallen over 70% since mid-October 2021 and it's down 37% in February 2023. I believe that the current level makes it an attractive time to invest.

Management point out that, over the longer-term, e-commerce in the Australian furniture and homewares category "remains highly under-penetrated" and that it has a "much larger addressable market to go after" with the categories of home improvement and trade and commercial.

The All Ords ASX share is seeing its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) improve over time as it scales. The FY23 second quarter saw EBITDA generation of $5.2 million, while the FY22 second quarter saw EBITDA of $4.6 million.

While the FY23 half-year revenue was down, the business is expecting to return to double-digit revenue growth in the shorter term. Over time, the company expects to grow its EBITDA margin from 3.8% in FY22 to more than 15% over the long-term thanks to scale benefits.

Adairs Ltd (ASX: ADH)

Adairs is a somewhat similar business – it also sells homewares and furniture, though the range is smaller.

The Adairs share price is down 53% from June 2021 and it's down 22% in February 2023.

This All Ords ASX share just released its FY23 half-year result, showing sales growth of 34.1% to $324.1 million, while earnings per share (EPS) went up by 22.2% to 12.7 cents. It also revealed that Adairs store floor space increased by 2.4%.

Adairs' new national distribution centre has been "below expectations", which has affected customer experiences, as well as "significantly higher cost of operations". However, there are "early signs that operational outcomes are improving". A new pricing model started in January 2023, which "will see average variable costs per unit dispatched reduce by 20%" compared to the FY23 first half level. Warehousing costs added $5 million compared to the first half of FY22.

The All Ords ASX share is working on reducing costs, while group sales in the first seven weeks of the second half of FY23 were up 1.8% year over year. It's still expecting to make between $70 million to $80 million of earnings before interest and tax (EBIT) in FY23.

I think that the supply chain and inflation issues will improve over 2023, while total sales could seem more resilient in a downturn thanks to ongoing store growth and expansion efforts.

The post 2 ASX All Ords shares I think can make big returns by 2025 appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) share market is facing an uncertain time for the rest of 2023.

While the market fell in 2022, it essentially recovered all of that lost ground in January 2023 after gaining 6%.

But, since early February, ASX 200 shares have been drifting lower.

Let's look at some of the opposing thoughts on the situation.

Optimistic case for ASX 200 shares

I think that when the market becomes scared, the sell-off usually happens when uncertainty is at its highest. By uncertainty, I don't mean how bad things are, I mean when it's not clear how bad things will become.

For example, the worst of the COVID-19 crash was in March 2020, even though deaths and lockdowns persisted for a long time after that.

Last year, the ASX 200 hit lows in June 2022 and at the end of September 2022. But, even though interest rates are much higher than in June and September, the share market has recovered. Investors have already gotten used to the high inflation story and are now focusing on the recovery.

Over time, many ASX 200 shares have shown they can grow profit to new records, which makes me believe plenty of them can grow profit into the future. This thought can help investors remain positive.

Investing is a long-term endeavour, so the short term isn't that important. But businesses like Wesfarmers Ltd (ASX: WES) and JB Hi-Fi Limited (ASX: JBH) are still reporting sales growth in January 2023. The Commonwealth Bank of Australia (ASX: CBA) result also showed another increase in net profit after tax (NPAT) thanks to stronger lending profits.

With the ASX 200 being weighted to banks like CBA and resource businesses like BHP Group Ltd (ASX: BHP), the index could be protected in 2023 by the banks' higher lending profits and strong resource prices (thanks to Chinese demand).

Bearish case

On the other hand, there's no guarantee that the ASX 200 will continue to perform.

On the resource side of things, China is reportedly not seeing a major upswing with its economy (yet), despite ending lockdowns. CNBC reported that there has been a "sharp drop in loans to households" year over year. The chief China economist of financial group Nomura, Ting Lu, said: "The mixed data send a clear message that markets should not be too bullish about growth this year."

With how important mortgage demand is for the construction sector in China, which uses a lot of steel/iron, it could imply that the iron ore price has risen too far.

Another negative factor could be that interest rates could continue to rise, further than some ASX 200 share investors are expecting.

The Australian Financial Review reported on Reserve Bank of Australia (RBA) governor Philip Lowe's comments to Senate estimates that people on fixed-rate loans who didn't use low rates to build up savings are in for "a lot more difficulty".

In the latest RBA monthly interest rate increase, Dr Lowe said that Australian CPI inflation for the three months to December 2022, in underlying terms, was 6.9%, which was higher than expected. The RBA board expects that "further increases in interest rates will be needed over the months ahead".

In the US, inflation rose in January by 0.5% after a 0.1% increase in December, according to reporting by CNBC. This was also more than expected. The Dallas Fed President Lorie Logan said:

We must remain prepared to continue rate increases for a longer period than previously anticipated, if such a path is necessary to respond to changes in the economic outlook or to offset any undesired easing in conditions.

Higher interest rates could be bad news for a number of sectors like retailers, property-linked businesses, and so on.

ASX bank shares could also suffer if a lot more households start getting into arrears.

Foolish takeaway

I don't think that the overall ASX 200 share market is going to crash, the worst of the decline may have been seen last year.

However, if some businesses report weaker-than-expected numbers, then this could lead to a plunge in share prices, such as we've seen with Temple & Webster Group Ltd (ASX: TPW) and JB Hi-Fi Limited. But I think that the declines are opening up long-term opportunities.

The post Will ASX 200 shares crash in 2023? appeared first on The Motley Fool Australia.

The Temple & Webster Group Ltd (ASX: TPW) share price suffered a massive sell-off after the company announced its FY23 half-year result yesterday. It fell by 27%.

Reporting season gives investors a true insight into how a business is performing, replacing the guesswork since a company's last update.

With everything that's going on with the economy, it's understandable why the market is uncertain about a number of ASX retail shares, including an online homewares and furniture retailer.

However, with the release of Temple & Webster's report, it's not just overall market sentiment that's hurting the company's share price. There were also some downsides within the result.

The negatives in the update

The ASX share said that revenue fell year over year by 12% to $235.4 million. Temple & Webster explained that the comparative period (the first half of FY22) was significantly helped by strong e-commerce demand because of COVID-19 lockdowns.

It also said that sales from 1 January 2023 to 5 February 2023, the first five weeks of the second half, were down 7%.

The earnings before interest, tax, depreciation and amortisation (EBITDA) margin was only 3.5%, which the company said was in line with its guidance of 3% to 5%. However, the EBITDA margin was 4.7% excluding the company's investment in The Build, its online home improvement start-up. It reduced its investment into The Build as it takes a "longer view" on the opportunity.

Temple & Webster also revealed that it reduced its marketing as a percentage of revenue. It was 11.8% of revenue, down from 13.6% for the prior corresponding period. It will return to 'brand building' from FY24 onwards.

As well, there were 840,000 active customers recorded in the FY23 half-year result, down from 940,000 at June 2022.

Here are some positives

While the company didn't produce overall growth, there were some promising signs.

Since the fourth quarter of FY22, the ASX share has been focusing on accelerating cost base initiatives and profit margin improvements. In the second quarter of FY23, the gross profit margin of 46.5% improved 180 basis points (1.80%) compared to the prior corresponding period. It also noted shipping recovery improvements.

The month of December 2022, which wasn't impacted by lockdowns or Omicron, saw revenue growth. The second quarter of FY23 saw EBITDA of $5.2 million, up 13% compared to the FY22 second quarter. I think that's a positive for the Temple & Webster share price.

Temple & Webster is still targeting much higher profit margins in the longer-term, which could be very helpful for the bottom line.

The ASX share also revealed that the revenue per active customer increased 7%, thanks to an increase in the average order value and an increase in repeat orders. It said that 57% of orders are now from repeat orders.

Private label sales continue to grow as a percentage of total sales. In the first half of FY23, private label sales were 28% of the total, up from 27% in FY22 and 26% in FY21. This range offers "better price positions relative to offline" and it generates higher profit margins.

Home improvement revenue increased by 12%, representing 6% of the group. Trade and commercial saw 17% revenue growth, with a focus on margin growth.

My thoughts on the Temple & Webster share price

I thought the sell-off was overdone. I don't believe the business is worth a quarter less than it was.

The company is still exposed to the same e-commerce tailwinds, it's still planning to grow margins, it's still talking about being profitable and getting back to growth this year. I think this is just a short(er)-term blip.

The situation over the next 12 months could be tricky, but investing is about more than just the next year. I think Temple & Webster shares could deliver substantial outperformance over the next three years as pessimism about the retail sector subsides and it invests for more growth.

The post Are Temple & Webster shares a bargain buy following Tuesday's 27% fall? appeared first on The Motley Fool Australia.

Although the Australian share market is closing in on a record high, not all shares are faring so well.

Two ASX shares that have fallen heavily over the last 12 months are listed below. Here's why experts say they could be buys:

Domino's Pizza Enterprises Ltd (ASX: DMP)

Despite a recent rebound, this pizza chain operator's shares have lost 31% of their value over the last 12 months. Investors have been selling this ASX share due to concerns over the impact of inflationary pressures on both consumers and its margins.

Analysts at Morgans appear to believe that this is a temporary headwind that will soon ease. In light of this, the broker believes now is the time to make an investment in a quality business. Morgans commented:

Cost inflation and adverse FX movements present significant challenges to earnings at present, as evidenced by EBIT margins, which fell from 13.4% in FY21 to 11.5% in FY22. […] We believe these pressures are transitory in nature. In our opinion, now is the best time to consider an investment in a quality business like DMP that is facing headwinds that will reverse in time.

Morgans has an add rating and $90.00 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price was sold off on Tuesday following the release of the online furniture and homewares retailer's half year results. This means its shares are now down over 50% since this time last year. The de-rating of tech shares and softening revenue are behind this decline.

Goldman Sachs remains positive and sees this weakness as a buying opportunity for patient investors. It commented:

We think the negative share price reaction (-27%) is overdone, in response to a weaker than expected trading update for the first five weeks of the year which we view as largely reflecting the lapping of omicron rather than a deterioration in underlying trends. We view the balance towards profitability as a sensible shift given near term uncertainty; that said we expect the business to pivot back to active customer growth in FY24 which should drive market share gains.

The broker has a conviction buy rating and $6.50 price target on Temple & Webster's shares.

The post Buy these beaten down ASX shares now: experts appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) is back on form on Tuesday. In afternoon trade, the benchmark index is up 0.15% to 7,428.7 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are dropping:

Ansell Limited (ASX: ANN)

The Ansell share price is down 8.5% to $25.71. Investors have been selling this health and safety products company's shares following the release of its half year results. Ansell reported a 17.2% decline in sales to $835.3 million and a 16.5% reduction in net profit after tax to $64.8 million. This was driven by weakness in the company's healthcare segment, which offset growth in the industrial segment.

Breville Group Ltd (ASX: BRG)

The Breville share price is down 6% to $20.38. This follows the release of the appliance manufacturer's half year results. Breville reported a 1.1% increase in revenue to $888 million and a 1.3% lift in net profit after tax to $78.7 million. The latter was ahead of consensus estimate of $74.2 million, but that hasn't stopped its shares from falling.

Star Entertainment Group Ltd (ASX: SGR)

The Star share price is down a further 12% to $1.30. Investors have been selling this casino operator's shares since the release of a disappointing earnings update on Monday. Star revealed that competition in Sydney and regulatory issues have been weighing heavily on its performance.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price is down 22% to $3.84. This morning, Temple & Webster released its half year results and reported a 12% decline in revenue and a 46.7% reduction in net profit after tax. This was due to the company cycling strong lockdown-boosted sales in the prior corresponding period. It is also worth noting that the company's result was in line with Goldman Sachs' estimates, despite what its share price may indicate.

The post Why Ansell, Breville, Star, and Temple & Webster shares are falling appeared first on The Motley Fool Australia.

1) The bear market in US stocks is over, according to Wells Fargo.

That's the good news. The not-as-good news is that doesn't mean we're headed straight into a bull market, according to an article on MarketWatch. 

"The bear market is over, but it is not the great reflation," said Wells Fargo equity analysts, led by Christopher Harvey, in a research note Monday. "We see neither a bull nor a bear market, just a market."

Wells Fargo "envision a malaise, not a hard landing" for the economy. "However, this does not necessarily mean it is risk-on from here on out," they cautioned. "A sustained re-pricing of risk is not supported by valuations or anemic economic growth expectations."

The same could be said about the Australian stock market, especially after the ASX 200 rally to start the new year, the benchmark index up close to 6% so far in 2023.

Some of the big winners this year have been more speculative stocks, like Nuix Limited (ASX: NXL) and Appen Limited (ASX: APX). 

But yesterday they both came crashing back to earth.

The Nuix share price slumped 26% after the AFR reported corporate regulator ASIC is expected to dump Nuix when it chooses its software partner late next month, as concerns rise over the troubled tech stock's cash burn and a wave of client defections.

The Appen share price plunged 15% after it said it expects to recognise a $204 million impairment charge relating to poor performance in its new markets division, excluding China.

Call it momentum trading, bottom fishing, fear of missing out (FOMO), or just plain gambling, but speculating on turnarounds for under-performing businesses often comes with a sting in the tail. 

2) Leading global fund manager Ophir characterised January's stock market rally as a "dash for trash", where low-quality stocks rallied hard.

Writing in its January letter to investors, Ophir said some stocks rallied despite no earnings news, and simply because of sentiment that inflation may be tamed, with the US market being led higher "by some of the lowest-quality, unprofitable and highly geared businesses".

"We expect to underperform during a low-quality rally in shares. It is not something that we want to chase. Sticking to your knitting is crucial as an investor as there are constant temptations to stray into the latest flavour of the month market segment through fear of missing out (FOMO)."

Ophir remains cautious for the middle and latter parts of this year, saying…

• "Interest rate hikes in major economies will continue to eat into demand, and corporate earnings may have further to fall. The size of any drop in demand and earnings, though, is highly uncertain."
  
• "Both a soft and hard landing are plausible outcomes."
  
• "In our view, the probability of more significant earnings falls is still higher than usual."

As for Ophir's edge, in the medium to long term, earnings growth drives share prices.

"With enough time and patience, and with no key changes in our investment team and process, we remain confident we can keep picking a higher proportion of earnings 'beats' than the market, which we believe will help drive long-term outperformance of our funds."

3) It can be a long and lonely time waiting for earnings growth to be recognised by the market, especially in the smaller and less liquid ASX stocks. 

In mid-2021, I bought shares in Duratec Limited (ASX: DUR), a leading Australian contractor providing assessment, protection, remediation, and refurbishment services to a broad range of assets and infrastructure. 

Whilst the company did endure some challenges imposed by COVID-19, it steadily and methodically grew revenue and its order book, the latter giving solid visibility into future earnings growth.

Yet the Duratec share price stagnated for 15 months. Doubts crept in. Boredom set in, and the temptation to sell and recycle the funds into something else. Was I missing something?

Then, somewhat suddenly, Duratec shares sprung to life.

A strategic acquisition, forecast FY23 revenue growth of 40%, and EBITDA growth of 73%, plus a string of contract wins has seen the Duratec share price jump to 77 cents, up 100% in the past six months. 

It's a win for the maxim that earnings growth drives share prices, in the medium to long term. Trading at around 0.4 times sales and around 5.6 times EBITDA, I remain a happy holder.

4) It doesn't always work out that well for my small and micro-cap portfolio.

I'm underwater on my Good Drinks Australia (ASX: GDA) holding, with the share price of one of the country's largest independent brewers trading at close to a 52-week low.

This comes despite the company having posted first-half revenue growth of 80%, albeit EBITDA coming in flat at $6.1 million as the company continued to invest in marketing for growth. 

Giving hope for long-suffering shareholders like me is the Good Drinks Australia target of growing its earnings to $25 to $30 million by FY25. By comparison, the market capitalisation today is just $85 million. The upside potential looks attractive.

Before it gets there, however, the company itself recognises it will have to carefully navigate an environment of reduced discretionary spend across the liquor category over the next 18 months. 

In September last year, the Good Drinks Australia Board and senior management team spent $3.2 million buying shares in their own company, paying 75 cents per share. 

"This significant level of financial commitment by the Board and management team reflects a shared belief in the attractiveness of the Company's valuation at these prices," said Chairman Ian Olson. 

Today, the Good Drinks Australia share price languishes at just 66 cents. Should the company hit its FY25 EBITDA target, the GDA share price should indeed turn out to be attractive both at 66 cents and 75 cents. But it's a competitive market, and premium-priced craft beer may struggle to sell once the "mortgage cliff" hits households. 

I continue to hold my GDA shares, may add, but will mostly just wait, and hope. 

5) The market is shooting first and asking questions later with Temple & Webster (ASX: TPW). The share price of the online furniture and homewares retailer is being taken to the cleaners, currently down 26.67% to $3.63.

Revenue for the first half declined 12% to $207 million, with the company reporting a rather skinny net profit after tax of just $3.9 million. That's a lot of sales, logistics, marketing, and investments for a tiny return. Compounding things was a decline in active customers to 840,000.

For the first five weeks of the second half, Temple and Webster sales were down 7% over the prior corresponding period, although this has been blamed on strong sales a year earlier due to the omicron outbreak.

Looking ahead, Temple & Webster's CEO, Mark Coulter says…

"Longer-term, ecommerce in the Australian furniture & homewares category remains highly under-penetrated, and we have a much larger addressable market to go after in our new target verticals."

Retailing is tough. Competitive, cyclical, and with skinny margins. I'll wish them the best from the sidelines, and wait for the headwinds to turn to tailwinds. It might take some time.

The post Dash for trash fades as earnings cliff looms for ASX shares, with the market shooting first and asking questions later appeared first on The Motley Fool Australia.

At the time of writing, the online furniture and homewares retailer's shares are down 13% to $4.32.

This follows the release of Temple & Webster's half year results, which appears to have disappointed the market.

Temple & Webster share price falls on major profit decline

• Revenue down 12% to $207.1 million
• EBITDA margin of 3.5%
• Net profit after tax down 46.7% to $3.9 million
• Cash balance of $102.4 million

What happened during the first half?

For the six months ended 31 December, Temple & Webster reported a 12% decline in revenue to $207.1 million. This reflects a decline in active customers to 840,000, offset partially by an increase in revenue per active customer.

In addition, management highlights that this half was going to be the toughest period for year over year comparisons due to the timings of lockdowns in FY 2022.

Positively, things improved in the second quarter. Revenue was down 18% in the first quarter, 6% in the second quarter, and marginally higher during the month of December.

In respect to earnings, Temple & Webster reported an EBITDA margin of 3.5%. This was towards the low end of its full year target range of 3% to 5%. Excluding its investment in The Build, its EBITDA margin would have been 4.7%. This reflects its focus on accelerating cost base initiatives and margin improvement programs.

How does this compare to expectations?

A note out of Goldman Sachs reveals that Temple & Webster's revenue was in line and its earnings were notably ahead of its expectations.

The broker also remains confident that the revenue environment has stabilised and the company is well positioned to deliver strong medium term growth through increasing population penetration and growing market share of online.

Management commentary

Temple & Webster's CEO, Mark Coulter, was pleased with the half. He said:

We're pleased with the progress made during the half, with a return to year-on-year profit growth in Q2 as we benefited from our focus on margin optimisation and cost management, despite revenue being down year-on-year, which highlights the flexibility of the business model.

While we dialed back spend in the half, we continued investing in our digital capabilities, product range and target verticals, with our Trade and Commercial and Home Improvement businesses growing 17% and 12% respectively.

Pricing remains a key differentiator for the business, growing our gross margin through strategic pricing initiatives and better sourcing. Similarly, with 72% drop ship that carries no inventory risk and 28% private label inventory, through our supply chain model we further improved flexibility and our product range, placing us in a strong position to continue growing market share.

Outlook

Also potentially weighing on the Temple & Webster share price today was its trading update.

Management revealed that for the first five weeks of the second half, its sales were down 7% over the prior corresponding period. Though, this has once again been blamed on strong sales a year earlier due to the omicron outbreak.

The company remains positive on its outlook and revealed that it could look to accelerate its growth by putting its $100 million cash balance to work with acquisitions. Mr Coulter commented:

We remain committed to our profitable growth strategy and will continue our focus on margin optimisation and cost management to ensure we end the year within our 3-5% EBITDA range. We believe our business model, customer metrics, brand and new growth horizons position us well to navigate any trading conditions and return to a high growth business.

Furthermore, we have over $100m of cash to expand our roadmap of sales initiatives and pursue inorganic opportunities to support sustainable growth. Longer-term, ecommerce in the Australian furniture & homewares category remains highly under-penetrated, and we have a much larger addressable market to go after in our new target verticals.

The post Temple & Webster share price sinks 13% on half year results appeared first on The Motley Fool Australia.

Here's what you need to know about these buy-rated growth shares:

Life360 Inc (ASX: 360)

The first ASX growth share that has been named as a buy is this rapidly growing location technology company.

Life360 provides a mobile app for families that offers useful features such as communications, driver safety, and location sharing. At the last count, there were approximately 50 million active monthly users of the app, which is generating significant recurring revenue.

Bell Potter is bullish on the company's future. It currently has a buy rating and $9.00 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX growth share that could be a buy is this leading online furniture and homewares retailer.

Goldman Sachs has tipped Temple & Webster to grow very strongly over the long term thanks to its strong position in a retail category that is still in the early stages of shifting online.

It highlights that the category in Australia remains under-penetrated online relative to other markets with 16.5% of sales made online versus 28% in the UK and 25% in the United States. And with this side of the retail market having higher barriers to entry, this bodes well for Temple & Webster.

Goldman has a buy rating and $7.60 price target on its shares.

WiseTech Global Ltd (ASX: WTC)

A final ASX growth share that could be a buy is this logistics solutions company.

WiseTech is the company behind the popular CargoWise One solution, which allows users to execute complex logistics transactions and manage freight operations from a single, easy to use platform.

Demand has been strong for its platform over the last few years and underpinned strong sales and profit growth. The good news is that this strong form is expected to continue in FY 2023, with management recently reaffirming its guidance for revenue growth of 20% to 23% and EBITDA growth of 21% to 30%.

Morgan Stanley is positive on the company's outlook. It has an overweight rating and $64.00 price target on its shares.

The post Looking for growth? 3 ASX shares experts rate as buys appeared first on The Motley Fool Australia.

Two that could be standout picks right now are listed below. Here's why brokers are feeling very bullish about these shares:

Domino's Pizza Enterprises Ltd (ASX: DMP)

Analysts at Morgans believe that this pizza chain operator is a growth share to buy. Its analysts have an add rating and $90.00 price target on its shares.

The broker believes that recent share price weakness caused by temporary headwinds has created a buying opportunity for investors. Particularly given its strong brand and global expansion plans. Morgans explained:

DMP is, in our opinion, a high quality operator with significant brand strength, first class executive management and a global platform for long-term network expansion. Cost inflation and adverse FX movements present significant challenges to earnings at present.

We believe these pressures are transitory in nature. In our opinion, now is the best time to consider an investment in a quality business like DMP that is facing headwinds that will reverse in time. The recent equity raise will fund DMP's acquisition of the remaining stake in its German joint venture and keep gearing low enough to allow for future M&A optionality.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX growth share that has been named as a buy is Temple & Webster.

Goldman Sachs is very bullish on this online furniture and homewares retailer and has put a buy rating and $7.60 price target on its shares.

Its analysts are expecting Temple & Webster to grow materially over the next decade thanks to its leadership position in a retail category that is in the early stages of shifting online.  It explained:

Our Buy thesis is predicated on the following key drivers: (1) we believe TPW is well positioned in the upcoming cycle to continue to grow market share, despite a weaker macro environment; (2) in our view TPW is best placed to be a winner in a category that favours scale players, requires a specialised approach to e-commerce, and has higher barriers to entry vs. other retail categories; and (3) greater focus on costs is a sensible strategy to balance near-term profitability with growth.

The post Expect big things from these ASX growth shares: analysts appeared first on The Motley Fool Australia.

While it certainly is rare, it does happen. So, why not aim for it?

How to turn $10,000 into $50,000 in seven years

To turn a $10,000 investment into $50,000 in the space of seven years, you're going to need to generate an average annual return of 26% per annum.

This is significantly higher than the share market's historical average of 10% per annum.

It also means that your investment will have to increase fourfold during that time. In light of this, I believe the best chance of generating this type of return is to look at the smaller side of the market.

After all, it is much easier for a $500 million to $1 billion company to grow four times its current size than it is for a $50 billion company.

However, the smaller we go looking for big returns, the higher we climb up the risk scale. This makes this endeavour suitable only for investors with a higher tolerance for risk.

With that in mind, here are a couple of ASX shares that I believe have the potential to generate very strong returns over the remainder of the 2020s.

Life360 Inc (ASX: 360)

Life360 is a $1.1 billion location technology company. It is best known for its eponymous Life360 app, which currently has 50 million global active users. The company also bolstered its offering with recent acquisitions of wearables company Jiobit and items tracking company Tile. These are opening the door to cross and upselling opportunities.

Goldman Sachs estimates that Life360 has a US$12 billion global total addressable market (TAM). This compares to the company's 2022 revenue guidance of US$225 million to US$240 million. It also means that even if Life360 grew its revenue four times over, it would still have captured less than 10% of its TAM.

And with the company expecting to be profitable this year, the days of dilutive capital raisings appear to be over. All in all, I believe this means it could be onwards and upwards from here for this ASX tech share.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX share that I believe has the potential to turn a $10,000 investment into $50,000 by 2023 is Temple & Webster. It is Australia's leading online furniture and homewares retailer with a market capitalisation of $650 million.

Once again, I am going to call on Goldman Sachs to support my argument with this one. The broker is expecting the company to grow its earnings before interest, tax, depreciation and amortisation (EBITDA) by a compound annual growth rate (CAGR) of 22% over the next 10 years.

And with the shift to online shopping still in its early stages for furniture sales, Temple & Webster commanding a leadership position, and the category having high barriers to entry, I feel that Goldman's forecast is achievable.

As a result, if it does deliver on Goldman's forecast, I believe it is highly possible for the Temple & Webster share price to generate a 26% per annum return over the next seven years.

The post 2 top ASX shares that could turn $10,000 into $50,000 by 2030 appeared first on The Motley Fool Australia.

While there will inevitably be some results that disappoint the market, history shows us that there are plenty that positively surprise.

Goldman Sachs has been busy analysing the month ahead and has named 10 buy rated ASX stocks that it believes could deliver stronger than expected updates.

Which ASX stocks could surprise?

The 10 ASX stocks that Goldman Sachs is tipping to positively surprise are as follows:

• Breville Group Ltd (ASX: BRG)
• Corporate Travel Management Ltd (ASX: CTD)
• Data#3 Limited (ASX: DTL)
• Endeavour Group Ltd (ASX: EDV)
• Judo Capital Holdings Ltd (ASX: JDO)
• Qantas Airways Limited (ASX: QAN)
• QBE Insurance Group Ltd (ASX: QBE)
• Qualitas Ltd (ASX: QAL)
• Telstra Group Ltd (ASX: TLS)
• Temple & Webster Group Ltd (ASX: TPW)

Financials

In respect to QBE, the broker has a buy rating and $16.67 price target on this insurance giant's shares. Goldman believes that "COR guidance & underlying insurance margins for FY23 likely to surprise to the upside."

Judo Capital is another ASX 200 that could surprise thanks to its strong customer deposits growth. Goldman highlights that "JDO continues to grow materially above system levels on customer deposits (10x in the month of Nov-22). Overall, this would translate into an additional tailwind to NIM." The broker has a buy rating and $1.70 price target on the bank's shares.

Goldman has a buy rating and $3.45 price target on Qualitas' shares. It is tipping a strong result from the investment company thanks to "developers and asset owners look to alternative financiers."

Retail

Breville could deliver a stronger than expected half year and full year result in FY 2023. This is due to Goldman's belief that "the secular trend of coffee consumption upgrade will continue globally and that BRG will stand to benefit structurally as a leader in this upgrade." The broker has a buy rating and $23.50 price target on its shares.

Goldman believes the market is being "too negative on near-term revenue" of Temple & Webster. It has a conviction buy rating and $7.60 price target on the online furniture retailer's shares.

The broker also believes that Endeavour finished the half better than the market was expecting. It feels this "suggests that trading in 1H23 is likely to offer positive surprise vs. consensus." Goldman has a buy rating and $7.80 price target on the drinks company's shares.

Tech and telco

Goldman expects Data#3 to deliver "continued strong top-line growth from digital transformation projects delayed through COVID." The broker also expects operating leverage to flow through as the ASX tech stock's business scales. It has a buy rating and $9.20 price target on Data#3 shares.

Telco giant Telstra has been named as a positive surprise candidate. This is due to "top line momentum more than offsetting the higher costs." Goldman has a buy rating and $4.60 price target on Telstra's shares.

Travel

Goldman Sachs is feeling positive about Corporate Travel Management's prospects in the first half and full year. As a result, it has put a buy rating and $20.30 price target on this ASX travel stock. Goldman expects "upside surprise in both 1H23 earnings vs. the Street as well as outlook statements."

Finally, Qantas, which Goldman has a conviction buy rating and $8.20 price target on, has been tipped to have finished the first half strongly. It notes that "US airlines' 4Q results also reflected strength in pricing in the current environment, with American Airlines, Delta Airlines and United Airlines unit revenue averaging +19% vs. pre-covid level in the quarter."

The post 10 ASX stocks to buy before they report this earnings season: Goldman appeared first on The Motley Fool Australia.

We all love buying things on sale! And why would you pay full price for an item if you can get it at a discount?

The theory of value investing is that sometimes the market's assessment of what a company is worth is inaccurate. And this presents opportunities for savvy bargain hunters to swoop in and buy quality ASX shares for less than their true value.

But, naturally, the key to successful value investing is learning to differentiate between truly great-value companies and those that may not be as cheap as they appear.

So, we asked our Foolish writers which ASX shares they reckon have been mispriced by the market and offer compelling buying for value investors in February. Here is what they said:

6 best ASX value shares for February 2023 (smallest to largest)

Adore Beauty Group Ltd (ASX: ABY), $104.01 million

Temple & Webster Group Ltd (ASX: TPW), $681.14 million

HomeCo Daily Needs REIT (ASX: HDN), $2.8 billion

Metcash Limited (ASX: MTS), $4.0 billion

Whitehaven Coal Ltd (ASX: WHC), $7.31 billion

Woodside Energy Group Ltd (ASX: WDS), $67.65 billion

(Market capitalisations as at market close on 3 February 2023)

Why our Foolish writers love these ASX value stocks

Adore Beauty Group Ltd

What it does: Adore Beauty claims to be the leader of online beauty retailing in Australia. It sells around 12,000 products from more than 270 brands. The company has recently launched two of its own private brands – Viviology and AB Labs.

By Tristan Harrison: I think this ASX All Ords share now looks great value after falling 75% since the beginning of 2022.

In the first quarter of FY23, returning customers increased by 14% year over year, and were up 85% over two years. The business is growing sales numbers through its app, and continues to onboard more brands (such as Dior).

Adore is expanding into New Zealand and is also working on delivering scale benefits, which should help with earnings before interest, tax, depreciation and amortisation (EBITDA) margin expansion over time.

I also think consumers will continue increasing the amount they shop online over time, which should be a tailwind for Adore Beauty in the coming years.

Motley Fool contributor Tristan Harrison does not own shares in Adore Beauty Group Ltd.

Temple & Webster Group Ltd

What it does: Temple & Webster is Australia's leading online furniture and homewares retailer.

By James Mickleboro: Although it has rebounded strongly from its lows, I still see a lot of value in the Temple & Webster share price for patient, long-term investors. That's because, despite this rebound, the online retailer's shares are still trading at an almost 50% discount to its long-term-average-enterprise value to gross-profit multiple.

I believe this makes Temple & Webster shares great value given the company's exceptionally strong, long-term growth potential, thanks to its leadership position in a retail category that is still in the early stages of shifting online.

Goldman Sachs agrees and is forecasting a +22% 10-year EBITDA compound annual growth rate (CAGR).

Motley Fool contributor James Mickleboro does not own shares in Temple & Webster Group Ltd.

HomeCo Daily Needs REIT

What it does: HomeCo Daily Needs is a real estate investment trust (REIT) holding properties that house the retailers and services Aussies turn to in their day-to-day lives. Its $4.6 billion portfolio boasts a 99% occupancy rate with Woolworths Group Ltd (ASX: WOW), Wesfarmers Ltd (ASX: WES), and Coles Group Ltd (ASX: COL) among its largest tenants.

By Brooke Cooper: The HomeCo Daily Needs unit price tumbled 19% over the course of 2022 despite the REIT posting a 30% lift in funds from operations last financial year. While the stock has recovered slightly in 2023, I believe it still offers great value.

It currently boasts a 6.1% dividend yield and a price-to-earnings (P/E) ratio of 10.96, according to CommSec data.

But it's not just those figures catching my eye. I like the strategic positioning of many of this ASX 200 stock's assets and its exposure to discretionary retail.

Morgans also has an add rating and a $1.52 price target on the REIT – a potential 10.5% upside at the time of writing.

Motley Fool contributor Brooke Cooper does not own units in HomeCo Daily Needs REIT.

Metcash Limited

What it does: Metcash is the supermarket and hardware distribution company behind the famous chains IGA, Mitre 10 and Bottle-O.

By Sebastian Bowen: When it comes to ASX 200 consumer staples shares, Metcash is often overlooked in favour of its peers like Woolworths. But I think this has resulted in some significant value.

Metcash shares currently trade on an earnings multiple far lower than either Woolworths or Coles. This has resulted in a substantial, fully-franked dividend yield of more than 5% today.

Back in December, Metcash announced that it had grown revenue by almost 8%, profit by more than 9% and dividends by 9.5%. I think these are all great signs and prove that Metcash is still a compelling value share in February 2023.

Motley Fool contributor Sebastian Bowen does not own shares in Metcash Limited.

Whitehaven Coal Ltd

What it does: ASX 200-listed Whitehaven Coal explores for and produces high-quality thermal coal (primarily used to generate electricity) and metallurgical coal (primarily used for steel making).

By Bernd Struben: The Whitehaven share price has slipped 11% so far in 2023, making it a top ASX value stock, in my opinion. Shares hit all-time highs in October but have dipped as coal prices retraced from their own records. Yet, I expect global demand for quality Aussie coal to remain strong as the Ukraine war drags on.

And don't forget the record half-year Whitehaven reported last month, with an all-time high of $2.6 billion in earnings before interest, tax, depreciation and amortisation (EBITDA) over six months.

Whitehaven pays a trailing dividend yield of 5.8%. The share price is up 202% over 12 months.

Motley Fool contributor Bernd Struben does not own shares in Whitehaven Coal Ltd.

Woodside Energy Group Ltd

What it does: Woodside is an Australian oil and gas company and the largest energy business listed on the ASX. It is a global, top-10 producer of liquefied natural gas (LNG) and hydrocarbon.

By Bronwyn Allen: It might seem odd to pick an ASX share trading at close to its 52-week high as a value buy. But this oil and gas giant is only trading on a price-to-earnings (P/E) ratio of 8.4!

Woodside is also riding a wave of high commodity prices right now. It's just reported record full-year production and revenue for 2022, beating its own production guidance with full-year revenue up 142% compared to 2021.

This reflects not only high oil and gas prices but also the value of Woodside's merger with the petroleum business of BHP Group Ltd (ASX: BHP). This was finalised on 1 July 2022. So, these full-year results represent only half a year's worth of production from these new assets.

That's what has me excited about Woodside's future earnings potential. It's also a good dividend payer, and the company has hinted at special dividends and share buy-backs post-merger, too.

Motley Fool contributor Bronwyn Allen owns shares in Woodside Energy Group Ltd.

The post Top ASX value shares to buy in February 2023 appeared first on The Motley Fool Australia.

Now, I'm not about to say that investors should jump in and buy the next hottest thing to get rich. That has the potential to turn out badly.

However, investors may be wondering about the best way to become wealthy. Personally, I prefer investing in ASX shares because of how little groundwork is required, and unlike property investment, you don't have to take on piles of debt to participate.

These days, people can get a decent return from savings accounts. But I don't think they're the best choice for growing wealth. Saving is good, but it could take a lot of money to become a millionaire through a savings account.

Let's say we use a savings account with an interest rate of 3.5%. Someone would need to save around $3,000 per month to get to approximately $1 million after 20 years.

How ASX shares can accelerate wealth

Here's an example of how ASX shares can produce good returns for investors.

At 31 December 2022, Vanguard Australian Shares Index ETF (ASX: VAS) had returned an average of 8.5% per annum over the prior 10 years. The average has now increased given the exchange-traded fund's (ETF) recent performance, up around 9% since the start of 2023.

If someone put $2,900 per month into the ASX share market and that investment returned an average of 9% per annum over the next 20 years, this would become $1.78 million.

But, we're not aiming for $1.78 million.

To get to $1 million, we'd only need to invest $1,650 per month if our investments returned 9% per annum.

What to look out for

The ASX share market is a good place to invest. However, it's dominated by large bank and mining shares such as Commonwealth Bank of Australia (ASX: CBA), ANZ Group Holdings Ltd (ASX: ANZ), BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

These giants are very good at what they do, but they're already huge, so I'm not sure how much more some of these names can grow.

Smaller companies or those targeting the global economy could have better growth potential over the long term. They have a longer growth runway and more room to re-invest.

I think we can see this with the returns generated by Vanguard MSCI Index International Shares ETF (ASX: VGS), which has returned an average of 10.6% since its inception in November 2014. If this ETF were to achieve the same returns over the next two decades, with its portfolio of global shares, investors would only need to invest $1,370 per month.

Which investment options could outperform?

I believe that there are some ASX growth share investments that can achieve stronger returns than 10%.

Smaller businesses could deliver a lot of growth. I think names like Airtasker Ltd (ASX: ART), Temple & Webster Group Ltd (ASX: TPW), Adore Beauty Group Ltd (ASX: ABY), Lovisa Holdings Ltd (ASX: LOV) and Healthia Ltd (ASX: HLA) could grow a lot over the next decade.

But, there are also some other options that could deliver outperformance. ETFs such as VanEck Morningstar Wide Moat ETF (ASX: MOAT), VanEck MSCI International Quality ETF (ASX: QUAL) and Betashares Nasdaq 100 ETF (ASX: NDQ) could deliver good growth from the current valuations.

The post How to create a million-dollar ASX share portfolio in two decades appeared first on The Motley Fool Australia.

This could make it an opportune time for investors to look at making some investments before the market takes off.

But which ASX shares would be top options to buy before the bull charges through the door?

3 ASX shares I would buy

If I were going to load up on some ASX shares for a potential bull market, I would look at those which have good operational momentum and positive long-term outlooks, but an underperforming share price.

One ASX share that immediately comes to mind is Temple & Webster Group Ltd (ASX: TPW). Its shares have been punished over the last 12 months and are down almost by a third.

That's despite the online furniture and homewares retailer growing strongly and having an enviable leadership position in a retail category that is still in the early days of shifting online. Furthermore, with this category having relatively high barriers to entry, it appears well-placed to remain a leader in the future.

In fact, it is for this reason that Goldman Sachs is forecasting Temple & Webster's earnings before interest, tax, depreciation and amortisation (EBITDA) to grow by a compound annual growth rate (CAGR) of 22% over the next 10 years.

Coffee to the rescue

Another ASX share that I would buy ahead of the bull market is Breville Group Ltd (ASX: BRG). This leading appliance manufacturer's shares are down 20% over the last 12 months.

And while a slowing housing market and the cost of living crisis could put pressure on demand for appliances, Breville's exposure to the growing coffee market could offset this. In fact, a recent update from rival De'Longhi appears supportive of this.

In addition, management has the option to rein in its spending on research and development if it wants to trim costs and support its earnings.

A beaten-down tech star

Finally, I think Life360 Inc (ASX: 360) could be an ASX share to buy. This location technology company's shares fell heavily last year when the market sold off unprofitable tech shares.

But with Life360 growing at a rapid rate and expecting to become profitable later this year, I believe a re-rating could happen when this milestone is achieved.

Another reason to be positive is the company's huge market opportunity. In FY2022, Life360 is expecting to report revenue in the range of US$225 million to US$240 million. This compares to its total addressable market estimated by Goldman Sachs to be US$12 billion globally.

Overall, I believe including these three ASX shares in a balanced portfolio could deliver solid results for investors when the bull market comes.

The post A new bull market is coming: 3 ASX shares I'd load up on before it gets here appeared first on The Motley Fool Australia.

So, that gives us a bit of time to look at some of the ASX shares that Goldman Sachs is tipping to outperform or underperform expectations this month.

Potential to outperform

Goldman believes that the following ASX shares have the potential to outperform the market's expectations in February. Here's what it is saying:

Breville Group Ltd (ASX: BRG)

The broker has warned short sellers that this appliance manufacturer could surprise to the upside with its full year guidance this month when it releases its half year results. It said:

On Discretionary our top pick remains Breville – De'Longhi 4Q came in better than expected and the stock is likely to short squeeze on stronger than expected full year EBIT guidance at 1H23 results.

Temple & Webster Group Ltd (ASX: TPW)

Its analysts are also very bullish on this online furniture and homewares retailer. In fact, the broker not only expects a stronger than consensus half year result, it is expecting Temple & Webster to outperform over the medium term. The broker commented:

Our FY23/FY24/FY25 revenue forecasts are +2.6%/+5.2%/+3.9% ahead of the market (Visible Alpha Consensus Data). We are more constructive around the medium term revenue outlook despite category level headwinds.

Woolworths Group Ltd (ASX: WOW)

Goldman is expecting this retail giant to deliver a strong result this month. In light of this, it appears to believe the market is being too negative and that it deserves to trade on higher multiples than its arch rival. It said:

We expect an outperformance trend for WOW vs. COL in comp sales see margins beginning to come through from 2Q23 on stronger omni-channel Xmas trading as well as more targeted promotions. On GSe, WOW is trading at a similar FY23E P/E vs. COL.

At risk of underperforming

Unfortunately, Goldman isn't very positive about the prospects of these ASX shares this month. Here's why it is tipping them to underperform expectations:

Altium Limited (ASX: ALU)

This electronic design software platform provider has been tipped to fall short of the market's expectations during the first half. Goldman is expecting Altium to deliver first half EBITDA of US$43 million, which is 3.6% short of consensus estimates. Its analysts are then expecting the same for its full year earnings.

Coles Group Ltd (ASX: COL)

Another ASX share that could underperform expectations according to Goldman Sachs is Coles. It believes that margin compression is weighing on the supermarket giant's performance. As a result, although it expects Coles' sales to be a fraction ahead of the market's estimates in FY 2023, its net profit assumption is 5.2% lower than the consensus. For the first half, Goldman said:

In 1H23, we expect group sales growth of 3.7% and EBIT growth of 0.4% as we expect ~10bps margin compression to 4.6% EBIT margin.

Wesfarmers Ltd (ASX: WES)

Finally, Goldman isn't feeling very positive on this conglomerate's prospects this month due largely to its Bunnings business. It warned:

We remain Sell-rated on WES as weaker home improvement trend and negative comps in 2H23 with Bunnings, at highest risk of volume deleverage impacting EBIT margins.

The post Goldman reveals the ASX shares that could surprise to the upside (and downside) this reporting season appeared first on The Motley Fool Australia.

Both of these small cap tech shares have been tipped as buys by Goldman Sachs recently. Here's what the broker is saying about them:

Readytech Holdings Ltd (ASX: RDY)

The first small cap ASX tech share that Goldman Sachs has named as a buy is Readytech.

It is a leading provider of mission-critical software-as-a-service (SaaS) solutions for the education, employment services, workforce management, government and justice sectors.

Goldman believes that the company's shares are trading at an attractive level after pulling back following the collapse of a takeover approach. It said:

RDY remains a tech value play within our coverage universe, trading at a >50% discount to peers when accounting for its robust growth outlook. Government software has been a pocket of strength and resilience within TMT (~3/4 of RDY's earnings) and we are positive on RDY's ability to deliver mid-teens organic growth at an expanding profit margin through the cycle.

Goldman Sachs has a buy rating and $4.45 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

Another small cap that Goldman Sachs is a big fan of is online furniture and homewares retailer Temple & Webster.

Its analysts believe that Temple & Webster is well-positioned for strong long term growth thanks to its leadership position in a retail category that is in the early stages of shifting online.  It commented:

Our Buy thesis is predicated on the following key drivers: (1) we believe TPW is well positioned in the upcoming cycle to continue to grow market share, despite a weaker macro environment; (2) in our view TPW is best placed to be a winner in a category that favours scale players, requires a specialised approach to e-commerce, and has higher barriers to entry vs. other retail categories; and (3) greater focus on costs is a sensible strategy to balance near-term profitability with growth.

Goldman has a buy rating and $7.60 price target on its shares.

The post Goldman Sachs names 2 exciting small cap ASX tech shares to buy right now appeared first on The Motley Fool Australia.

Here's what its analysts are saying about these explosive ASX growth shares right now:

Temple & Webster Group Ltd (ASX: TPW)

The first ASX growth share that Goldman Sachs says investors should buy is Temple & Webster. It is Australia's leading pure-play online retailer of furniture and homewares.

Goldman is tipping the company to grow at a rapid rate long into the future. It said:

TPW is early in its maturity cycle supporting long-term, sustainable growth. We forecast a +22% 10-yr EBITDA CAGR driven by consolidation of market share and growing online penetration. We do not think the market is pricing in upside from long term market share gains: If TPW can scale at a similar rate to JBH's early growth this could see >100% upside to our current valuation.

The broker is so positive on the company that it has just added its shares to its conviction list. Goldman has a conviction buy rating and $7.60 price target.

Webjet Limited (ASX: WEB)

Another ASX growth share that Goldman rates as a buy is online travel booking company Webjet.

It believes the company has comes out of the pandemic in a significantly stronger position. So much so, it is expecting Webjet to grow its earnings at a six-year compound annual growth rate of 15.3%. It commented:

Our near term earnings changes remain modest given that we already price in a strong recovery for WEB in FY24/25. What these results have given us greater confidence is in the group's longer term outlook for both the Bedbanks and OTA businesses. WEB also continues to report strong cash generation.

Goldman has a conviction buy rating and $7.20 price target on its shares.

The post 2 explosive ASX growth shares to buy now: Goldman Sachs appeared first on The Motley Fool Australia.