S&P/ASX 200 Index (ASX: XJO) tech shares could be leading opportunities to buy at their current prices, according to the broker Morgans.

Since November 2021, there has been plenty of volatility on the ASX for the tech sector. Interest rates and inflation are having a significant impact on valuations. Interest rates pull down on asset prices like gravity – the higher the interest rate, the lower the asset price is expected to be.

The Reserve Bank of Australia (RBA) recently implemented its tenth consecutive interest rate increase to 3.6%, with further tightening flagged. But Morgans said the interest rate is getting closer to its top. Once that is reached, the broker expects "quality technology and classified names to once again shine".

Hence, with some businesses trading at lower prices, experts at Morgans have identified three of their tech favourites.

High-quality ASX 200 tech share choices

Morgans explained that its current preference right now is for the high-quality names of Xero Limited (ASX: XRO), REA Group Limited (ASX: REA), and SEEK Limited (ASX: SEK).

In the recent reporting season, both SEEK and REA Group announced their results. Let's start with SEEK.

Morgans noted that SEEK beat the expectations of analysts. The broker pointed out that SEEK grew revenue by 21% year over year, while earnings before interest, tax, depreciation and amortisation (EBITDA) went up 13% year over year.

The broker said that SEEK benefited from "strong volume growth", with underlying structural tailwinds continuing. However, Morgans is expecting "normalisation" in the second half of FY23.

Yield growth helped again to offset costs, with recent price rises rolling through. Platform 'unification' spending is impacting margins in the short term.

Morgans also said that SEEK Asia "performed well" with the company "beginning to extrapolate early benefits from the unified platform".

Looking at REA Group, Morgans called the result "resilient" with 5% revenue growth, though EBITDA was "marginally down" by 2%. Group EBITDA margin fell by around 100 basis points (1%).

The broker commented that yield growth of 11% year over year was a "key driver" of the ASX 200 tech share's revenue growth, while depth penetration remains "strong". However, there is a "cautious outlook" for new listings growth over the rest of the year. It's expecting volatility to continue, with a possible decline of around 10% in the second half of FY23.

Morgans said that expenses are in focus, with the EBITDA margin impacted by higher costs, such as the investment in REA India.

Xero has a different reporting schedule. But, the company has just revealed that it's going to cut 700 to 800 roles globally and streamline its business.

The ASX 200 tech share is now balancing growth and profitability, while "taking a robust approach to capital allocation that supports long-term value creation".

Xero's management is now targeting an operating expense ratio in FY24 of around 75%, with an improvement from between 80% to 85% in FY23.

In other words, the business is expecting to significantly increase its profit margins in the next 12 to 18 months.

The post Top ASX 200 tech shares to buy right now: Morgans appeared first on The Motley Fool Australia.

If you go shopping for a couch or a car, you target ones that are on sale. 

So why wouldn't you do the same for ASX shares?

For those who are still scared of buying into stocks that have fallen in price, here's a couple of recommendations that might change your mind:

'The shares are trading at a discount'

Even though Lynas Rare Earths Ltd (ASX: LYC) is the only major producer of rare earth minerals outside of China, the stock price has taken a 17.8% dive over the past month.

If you go back six months, the shares have taken a painful 21.8% haircut.

According to Catapult Wealth portfolio manager Tim Haselum, recent news from the world's largest electric car marker sent a scare through investors.

"In our view, Tesla Inc (NASDAQ: TSLA) announcing a plan to eliminate rare earths from next generation electric vehicles… impacted the share price," Haselum told The Bull.

"But we believe investors over-reacted to the Tesla news, given continuing demand for rare earths. Consequently, we believe the shares are trading at a discount."

Shaw and Partners portfolio manager James Gerrish said pretty much the same last week.

"Tesla, and EVs in general, are just one of many demand sources of rare earth materials."

Haselum also felt like reporting season last month didn't flatter the Lynas Rare Earths.

"The company posted higher revenue in the first half of fiscal year 2023, but the cost of sales also rose," he said.

"The company also experienced water supply disruptions at its Malaysian plant."

'A strong track record of compound sales growth'

Xero Limited (ASX: XRO) shares lifted 10.5% in a single day last week after its new chief executive announced plans to slash costs and focus on profitability.

However, the stock is still almost half what it was in November 2021.

Haselum thus sees a golden buying opportunity at the moment.

"This accounting software provider is trading at a discount to prior earnings multiples since the price has fallen from its highs," he said.

"The company has a strong track record of compound sales growth and penetrating key markets… We consider Xero a top quality company."

This week Xero shares took another dive due to the collapse of Silicon Valley Bank, which had substantial clientele in the US tech industry.

However, the New Zealand software company assured investors that it has no "material exposure" to the failed institution.

"As at 10 March 2023, Xero's total exposure to Silicon Valley Bank was approximately US$5 million, reflecting Xero's local transactional banking relationships with SVB in the US and UK," the company announced to the ASX.

"That amount represents less than 1% of Xero's cash and cash equivalents as at September 30 2022."

The post 'Top quality': Expert picks 2 ASX 200 shares to buy at a nice discount appeared first on The Motley Fool Australia.

In morning trade, the cloud accounting platform provider's shares are down 3% to $84.06.

Why is the Xero share price falling?

Investors have been selling Xero shares today amid broad weakness in the technology sector following the collapse of Silicon Valley Bank (SVB) on Friday.

This has led to the S&P/ASX All Technology Index falling 2.5% this morning.

As SVB has a strong presence in the sector, investors appear concerned what ramifications this will have on this area of the economy.

Xero's exposure

The good news is that Xero's exposure to the collapse of SVB is minimal.

This morning, the company attempted to ease investor nerves by revealing that "it does not have a material exposure" to the collapsed bank.

It highlights the following:

As at 10 March 2023 Xero's total exposure to SVB was approximately $5m USD, reflecting Xero's local transactional banking relationships with SVB in the US and UK. That amount represents less than 1% of Xero's Cash and Cash equivalents as at September 30 2022.

Is this a buying opportunity?

According to a note out of Morgans on Friday, its analysts are recommending that investors snap up Xero shares.

In response to its cost cutting plans, the broker has retained its add rating with an increased price target of $97.00. Based on the current Xero share price, this implies potential upside of over 15% for investors.

Morgans commented:

The focus has moved to reducing costs and driving disciplined growth. This means XRO now trades closer to a Growth At a Reasonable Price (GARP), where previously it was Growth At Any Price (GAAP). This realignment of investment priorities should open XRO to a much broader range of potential investors.

The post Xero share price dips 3% amid Silicon Valley Bank fallout appeared first on The Motley Fool Australia.

Given that SVB had a big presence in the tech sector, a large number of ASX tech shares were customers and had funds in its bank accounts.

With the bank now falling into insolvency, it is unclear what will happen to these funds and what ramifications it will have on their operations and access to capital.

Though, the good news is that no ASX tech shares appear to have put all their eggs in one basket, underlying the importance of diversification and limiting their exposure to this collapse.

Here's a summary of tech shares with SVB exposure:

Bigtincan Holdings Ltd (ASX: BTH)

This sales enablement platform provider revealed that it has no material exposure to SVB.

Life360 Inc (ASX: 360)

This location technology company is a little more complex than others but estimates that its exposure is US$5.6 million. However, Life360 acknowledges that it also has US$75.4 million in shares of money market mutual funds invested in short-term, AAA-rated U.S. Government Treasury and Government Agency securities that are in SVB custodian accounts. It believes that these accounts were not co-mingled with SVB's assets.

Nitro Software Ltd (ASX: NTO)

This document productivity software company has US$12.2 million of its cash reserves held on deposit at SVB. This compares to its cash balance of US$28 million at the end of December. Positively, though, the company revealed that this development has not impacted its takeover approach from Potentia.

Redbubble Ltd (ASX: RBL)

This struggling ecommerce company estimates that its cash exposure to the SVB collapse is $1.3 million. However, it had a first-half closing cash balance of $97 million, so this is immaterial.

Sezzle Inc (ASX: SZL)

This buy now pay later provider had limited exposure to SVB. Just US$1.2 million of its US$68 million was held at the collapsed bank.

Siteminder Ltd (ASX: SDR)

This travel technology joined in on the bank run on Friday and "had success in transferring some of its cash holdings to other banking partners." However, cash holdings of up to A$10 million were not able to be transferred. The company also revealed that it has an undrawn US$20 million revolving credit facility with SVB. Nevertheless, it currently has A$58 million in cash outside SVB to fund its operations.

Xero Limited (ASX: XRO)

This cloud accounting platform provider revealed that its total exposure to SVB is approximately US$5 million. This represents less than 1% of its most recent cash and cash equivalents balance.

Latest development

In the last few minutes, the US government has announced that it will be stepping in.

According to CNBC, depositors at both SVB and Signature Bank in New York, which has also just closed, will have full access to their deposits on Monday.

A joint statement from Fed Chair Jerome Powell, Treasury Secretary Janet Yellen, and FDIC Chair Martin Gruenberg, said:

Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.

After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

This news has given Wall Street a major lift and sent US futures hurtling higher.

The post These ASX tech shares have exposure to the Silicon Valley Bank collapse appeared first on The Motley Fool Australia.

Here's why brokers think investors ought to buy them next week:

Pilbara Minerals Ltd (ASX: PLS)

According to a note out of Citi, its analysts have retained their buy rating and $4.80 price target on this lithium miner's shares. Although it expects that lithium prices may remain under pressure in the immediate term, Citi suspects that they could rebound in the coming months as restocking takes place in the Chinese battery materials market. The Pilbara Minerals share price ended the week at $3.98.

Rio Tinto Ltd (ASX: RIO)

A note out of Goldman Sachs reveals that its analysts have put a conviction buy rating on this mining giant's shares with an improved price target of $140.40. Goldman is bullish due to Rio Tinto's iron ore production growth outlook and its potential free cash flow per tonne improvements. It also believes that iron ore prices could be heading to US$150 a tonne in the near term thanks to supply deficits and restocking. The Rio Tinto share price was fetching $117.28 at Friday's close.

Xero Limited (ASX: XRO)

Analysts at Goldman Sachs have also retained their conviction buy rating on this cloud accounting platform provider's shares with an improved price target of $116.00. This follows news that Xero is making major cost reductions. Goldman was pleased with the news and has upgraded its earnings estimates for the coming years to reflect the changes. The Xero share price ended the week at $86.73.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

The team at Morgans has named a number of growth shares on its best ideas list for March.

Three growth shares that have been given the thumbs up are listed below. Here's why it is bullish on them:

Treasury Wine Estates Ltd (ASX: TWE)

Morgans is a fan of this wine giant and believes it is destined to deliver strong earnings growth over the coming years. This follows its successful internal restructure and solid demand for luxury wine.

The broker has an add rating and $15.05 price target in its shares. It commented:

TWE owns much loved iconic wine brands, the jewel in the crown being Penfolds. We rate its management team highly. The foundations are now in place for TWE to deliver strong earnings growth from the 2H22 over the next few years. Trading at a material discount to our valuation and other luxury brand owners, TWE is a key pick for us.

Webjet Limited (ASX: WEB)

This online travel agent could be an ASX 200 growth share to buy according to Morgans. It has an add rating and $7.20 price target on its shares.

The broker believes Webjet's shares are attractively priced based on its positive long term outlook. It said:

Based on our forecasts, WEB is trading on an FY24 recovery year PE which is at a discount to its five-year average PE (pre-COVID). Its WebBeds (B2B) business is highly leveraged to the northern hemisphere summer holiday season which is forecast to be strong. Webjet OTA is leveraged to ANZ domestic and international travel. Management also wasted a crisis and cost reduction initiatives will reduce its cost base by 20% across the group once the business returns to scale.

Xero Limited (ASX: XRO)

Finally, this cloud accounting platform provider could also be an ASX 200 growth share to buy this month. Morgans believes the company's shares are great value and that this is a rare buying opportunity for investors.

It has an add rating and $97.00 price target. The broker commented:

XRO is a high quality cash generative business with impressive customer advocacy and duration. Over the last 12 months rising interest rates and competition have made things harder for Xero. However, we see the current shortterm weakness as a rare opportunity to buy a high quality global growth company at a discount to the life time value of its current customer base.

The post Morgans names the best ASX 200 growth shares to buy in March appeared first on The Motley Fool Australia.

Three broker buy ratings that you might want to know more about are summarised below. Here's why brokers think these ASX shares are in the buy zone:

Carsales.Com Ltd (ASX: CAR)

According to a note out of Macquarie, its analysts have retained their outperform rating and lifted their price target on this auto listings company's shares to $25.10. This follows news that the company is increasing its stake in Brazil's WebMotors to 70%. Macquarie appears pleased with the plan given how large the Brazilian market is. The Carsales share price last traded at $22.64.

Treasury Wine Estates Ltd (ASX: TWE)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating and $14.70 price target on this wine giant's shares. This follows the company's FY 2023 strategy day in the Napa valley this week. Goldman believes that Treasury Wine is highly energised to generate growth in an otherwise challenged industry. It highlights that the company has its eyes on younger consumers, noting that the earlier they are recruited, the more loyal they become. The Treasury Wine share price is fetching $13.00 today.

Xero Limited (ASX: XRO)

Analysts at Citi have retained their buy rating and lifted their price target on this cloud accounting platform provider's shares to $105.70. This follows news that Xero is undertaking a major cost cutting program that will reduce its workforce by upwards of 16%. Citi appears pleased with the news and is expecting this to underpin very strong earnings growth over the coming years. The Xero share price is trading at $86.26 this afternoon.

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

In late morning trade, the cloud accounting platform provider's shares are down 0.5% to $86.62.

Though, the Xero share price is still up over 10% this week thanks to a strong gain on Thursday.

This has been driven by news that the company is looking to make significant cost savings by reducing its workforce.

Does this make Xero a stock to buy now?

The good news is that one leading broker doesn't believe it is too late to jump on this new leaner, meaner Xero.

According to a note out of Goldman Sachs, its analysts have responded to the news by reiterating their conviction buy rating with an improved price target of $116.00.

Based on the current Xero share price, this implies potential upside of 34% for investors over the next 12 months.

What did the broker say?

Goldman continues to forecast strong revenue growth in the coming years thanks to structural tailwinds and its strong pricing power.

And thanks to these job cuts, the broker has boosted its earnings estimates meaningfully through to FY 2026. It explained:

We remain confident on the revenue outlook and forecast sustained growth (GSe +16% FY22-26E CAGR), given strong pricing power Xero has, the structural tailwinds driving cloud accounting adoption globally, and that Xero has somewhat protected its go-to-market functions in this restructure.

Although no trading update was provided, high frequency data suggest near-term subscriber trends remain solid. We lower our FY24-26 revenues by 1 to 3% on lower international sub growth (XRO vacancies are ANZ skewed currently at 80% of open roles vs. 56% staff). We upgrade FY24-26E EBITDA by +9-17% given the step change in opex, noting that we were +16 to +19% ahead of prior VA consensus.

Goldman ultimately expects this to lead to net profit after tax of:

• NZ$21.1 million in FY 2023
• NZ$78.4 million in FY 2024
• NZ$122.9 million in FY 2025
• NZ$179.7 million in FY 2026.

All in all, the broker continues to see Xero as the best tech stock to buy right now on the Australian share market. It concludes:

Overall we continue to see Xero as our top large cap technology pick, with the shift to profitability as a clear inflection point on several key debates: (1) priorities of new CEO in terms of scaling vs. profitable growth; (2) highlighting the scale and earnings potential of the business (masked since FY19 given breakeven FCF despite ARR > doubling); (3) supporting a multiple re-rate (noting the divergence in ASX profitable/unprofitable tech since 2021).

The post Is the new leaner, meaner Xero stock a buy right now? appeared first on The Motley Fool Australia.

Will the market be able to build on this on Friday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to end the week on a disappointing note. According to the latest SPI futures, the ASX 200 is expected to open 43 points or 0.6% lower this morning. In late trade in the United States, the Dow Jones is down 0.8%, the S&P 500 is down 1%, and the NASDAQ index is down 1.2%.

Oil prices fall again

Energy producers Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a poor finish to the week after oil prices continued to slide overnight. According to Bloomberg, the WTI crude oil price is down 1.3% to US$75.68 a barrel and the Brent crude oil price is down 1.3% to US$81.58 a barrel. Recession fears have been weighing on prices this week.

Buy Xero shares

The Xero Limited (ASX: XRO) share price surged higher yesterday after announcing major cost reductions. This has gone down well with analysts at Goldman Sachs, who have retained their conviction buy rating with an improved price target of $116.00. It said: "We upgrade FY24-26E EBITDA by +9-17% given the step change in opex."

Gold price rises

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could have a decent finish to the week after the gold price rose overnight. According to CNBC, the spot gold price is up 1.1% to US$1,838.5 an ounce. US dollar weakness and market volatility gave gold a boost.

Metcash shares downgraded

The Metcash Limited (ASX: MTS) share price could be overvalued according to Goldman Sachs. This morning, the broker has downgraded the wholesale distributor's shares to a sell rating with a $3.50 price target. It explained: "We downgrade MTS from Neutral to Sell due to moderating supermarket inflation and rising competition, both of which we expect to negatively impact MTS's Food sales and EBIT."

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

Four ASX shares that are climbing more than most today are listed below. Here's why they are zooming higher:

Arafura Rare Earths Ltd (ASX: ARU)

The Arafura share price is up 6% to 60 cents. This is despite there being no news out of the rare earths developer. However, it is worth noting that Bell Potter has called recent share price weakness following comments out of Tesla an overreaction. It has retained its speculative buy rating and 72 cents price target.

Myer Holdings Ltd (ASX: MYR)

The Myer share price is up 15% to $1.10. This has been driven by the release of the department store operator's half-year results. It revealed a 24.2% increase in total sales to $1,884.9 million and the doubling of its net profit to $65 million. This allowed Myer to declare interim and special dividends of 4 cents per share each.

Volpara Health Technologies Ltd (ASX: VHT)

The Volpara share price is up almost 4% to 68 cents. Investors have been buying this health technology company's shares following the release of a business update. Volpara revealed a new contract with Sutter Health for its Risk Pathways product. This represents an additional US$900,000 in Total Contract Value (TCV) over an initial three-year period.

Xero Limited (ASX: XRO)

The Xero share price is up 9% to $85.79. This morning, this cloud accounting platform provider announced a major cost cutting plan. This will involve reducing its workforce by 700-800 roles, which represents upwards of 16.3% of its 4,915 full time equivalent employees. Management expects this to reduce its operating expense to revenue ratio to approximately 75% in FY 2024. This ratio stood at 83.9% in the first half.

The post Why Arafura, Myer, Volpara, and Xero shares are zooming higher appeared first on The Motley Fool Australia.

In early trade, the cloud accounting platform provider's shares were up 11% to $87.50.

The Xero share price has eased back a touch since then but remains up 8% to $85.18.

Why is the Xero share price racing higher?

Investors have been buying the company's shares this morning after it announced a program to streamline its operations, realign the business to drive greater operating leverage, and better balance its growth and profitability.

The key to this will be reducing its workforce by 700-800 roles. This represents upwards of 16.3% of its 4,915 full time equivalent employees.

Management expects this action to reduce its operating expense to revenue ratio to approximately 75% in FY 2024.

As a comparison, total operating expenses as a percentage of operating revenue came to 83.9% or NZ$552.2 million during the first half.

At a ratio of 75%, Xero's operating expenses would have been NZ$493.9 million for the half. This is an improvement of more than NZ$50 million, which annualises to over NZ$100 million.

Clearly, big cost savings lie ahead if this program is a success. This goes some way to explaining why the Xero share price is having such a strong showing today.

Broker response

The team at Goldman Sachs has responded to the news and appear pleased with management's plans. It said:

Xero has today announced a 700-800 headcount reduction globally (c. 14-16% of the 4.9k Full-time-employees as at Sep-22), consistent with our view that the business may shift to profitable growth, following a considerable drop in job vacancies. While having a limited impact on FY23 costs (Xero reiterated FY23 opex guidance for lower end of 80-85% of revenue, GSe 81.6%), this is expected to drive a material reduction into FY24, with opex expectations of c.75% of revenue (vs. GSe 79%).

Appears to be focused on efficiency, not on any changes to trading: with the rationale for the cost out to be to: (1) streamline operations; (2) drive greater operating leverage; and (3) achieve a better balance of growth and profitability.

Goldman currently has a conviction buy rating and $109.00 price target on Xero's shares.

The post Why is the Xero share price racing 11% higher today? appeared first on The Motley Fool Australia.

This follows the release of a major announcement out of the cloud accounting platform provider.

Why is the Xero share price on watch?

This morning, Xero announced a program to streamline its operations, realign the business to drive greater operating leverage, and better balance its growth and profitability. Management believes this will strengthen the company's ability to deliver value to customers and take advantage of the significant growth opportunity presented by cloud accounting.

Unfortunately, this will involve significant job losses, with Xero revealing that the program involves reshaping Xeroʼs organisational structure by reducing 700-800 roles across its business. This represents upwards of 16.3% of its 4,915 full time equivalent employees.

Management expects these headcount reductions to improve Xeroʼs operating profitability by reducing its operating expense to revenue ratio significantly in FY 2024. Along with its reinvestment into strategic priorities, the company is targeting an operating expense to revenue ratio of approximately 75% in FY 2024.

As a comparison, during the first half of FY 2023, Xero reported a ratio of 83.9%. And for the full year, management still expects its ratio to be towards the lower end of its guidance range of 80% to 85%.

However, this guidance excludes restructuring charges associated with the program, which are expected to be in the range of NZ$25 million to NZ$35 million.

Xero's CEO, Sukhinder Singh Cassidy, said:

We have made strong progress in executing our strategy. However as we aspire to build a higher performing global SaaS company and to enable Xeroʼs next phase of growth and drive better customer outcomes, we need to streamline and simplify our organisation.

These changes, and our decision to reinvest in key strategic areas, will adjust our operating cost base as we balance growth and profitability, while taking a robust approach to capital allocation that supports long term value creation.

Waddling off

The company has also revealed that it plans to exit cloud-based lending platform Waddle, which was acquired in 2020 in a deal valued at A$80 million.

Management advised that it expects to incur a write down of NZ$30 million to NZ$40 million in FY 2023 as a result of this decision. However, it has stressed that it remains committed to its broader small business platform strategy.

Singh Cassidy added:

These are difficult but necessary steps as we work to further strengthen Xero for the future, while carefully balancing the interests of all our stakeholders. We don't take these decisions lightly and we recognise today is a very hard day for our people.

Todayʼs announcement does not take away from the significant contributions from everyone at Xero. We take our purpose and values seriously, and are committed to working closely with each impacted employee and providing them with the right level of support.

The Xero share price is down 19% over the last 12 months. Shareholders will no doubt be hoping the market responds kindly to its cost cutting plans.

The post Xero share price on watch amid major cost cutting plans appeared first on The Motley Fool Australia.

With rising interest rates, ASX growth shares have taken somewhat of a back seat over the past year or so. Instead, many investors have been seeking out a potentially smoother ride among blue-chip, value, and dividend stocks.

But, as the great Warren Buffett once said, it can pay to 'be greedy when others are fearful'.

While it can feel pretty scary investing your hard-earned cash into growth stocks during periods of economic uncertainty, these can be the best times to find the greatest investing opportunities. Particularly if you take the time to sniff out relatively young businesses with strong business models, competent management teams, and significant market opportunities.

So, if you're happily focused on the investment destination, and don't mind if the road gets a bit bumpy along the way, ASX growth stocks could be just the ticket.

Luckily for you, our Foolish writers have started the research engine for you and flagged the ASX growth shares they reckon are well worth taking for a spin in March. Here is what they came up with:

6 best ASX growth shares for March 2023 (smallest to largest)

Airtasker Ltd (ASX: ART), $103.40 million

Readytech Holdings Ltd (ASX: RDY), $358.97 million

Nanosonics Ltd (ASX: NAN), $1.37 billion

Webjet Limited (ASX: WEB), $2.68 billion

Treasury Wine Estates Ltd (ASX: TWE), $9.76 billion

Xero Limited (ASX: XRO), $11.95 billion

(Market capitalisations as at market close on 8 March 2023)

Why our Foolish writers love these ASX growth stocks

Airtasker Ltd

What it does: Airtasker runs an online market platform that connects people who need services or tasks performed with those willing to perform them for a fee. This could be anything from assembling furniture or putting up a playground to gardening, maintenance, and removalist services.

By Sebastian Bowen: Airtasker is one of the Aussie stock market's newer companies, having only had its initial public offering (IPO) in 2021. But this ASX growth share has hit the ground running, and I have been impressed with Airtasker's performance during its short public life.

Just last month, Airtasker reported its half-yearly earnings, which showed an impressive 57% rise in revenues and a 58% surge in gross profits. Clearly, Airtasker's business model is proving popular.

Despite this, the Airtasker share price remains depressed and is sitting just above its current 52-week (and all-time) low. As such, I think it's well worth a look this month.

Motley Fool contributor Sebastian Bowen does not own shares in Airtasker Ltd.

Readytech Holdings Ltd

What it does: Readytech describes itself as a next-generation, software-as-a-service (SaaS), cloud-based software provider to the education, workforce, government, and justice sectors. Its software includes people management systems, payroll, employment services, and community engagement solutions.

By James Mickleboro: I think Readytech could be a top option for ASX growth investors in the current environment. This is due to its strong growth outlook and its defensive earnings. With respect to the latter, almost 80% of the company's first-half earnings before interest, tax, depreciation, and amortisation (EBITDA) came from its education and government segments.

Combined with its high-conviction pipeline valued at $27 million, Goldman Sachs believes this will lead to Readytech delivering a "+20% FY22-25E EBITDA [compound annual growth rate] CAGR". It is no surprise, then, that the broker has a buy rating and a lofty $4.40 price target on Readytech shares.

This represents around 44% upside based on the current Readytech share price of $3.06.

Motley Fool contributor James Mickleboro does not own shares in Readytech Holdings Ltd.

Nanosonics Ltd

What it does: This company provides disinfection solutions for use with ultrasound probes in the healthcare industry. Nanosonics helps bring increased efficiency and safety to the process of infection prevention through the use of its Trophon devices.

A total of 31,120 units are installed globally across the United States, Canada, the United Kingdom, Europe, and Australia.

By Mitchell Lawler: A true ASX 'growth' share, in my opinion, is a company that has the capability and ingenuity to continually expand its addressable market through product innovation. Nanosonics is delivering in this regard by building upon the success of its Trophon devices. 

The Trophon system is targeted to a specific niche in disinfection, the ultrasound probe market. Now, Nanosonics is gearing up to disrupt another segment of healthcare equipment cleaning with 'Coris', an endoscope cleaning device. 

Notably, Nanosonics' revenue is growing at an impressive rate. Total revenue for FY23 is forecast to be between 36% and 41%. Bringing new products to the market should help the company sustain this high rate of growth into the future. 

Motley Fool contributor Mitchell Lawler does not own shares in Nanosonics Ltd.

Webjet Limited

What it does: S&P/ASX 200 Index (ASX: XJO) listed Webjet provides online travel bookings in both the business-to-consumer and business-to-business segments.

By Bernd Struben: Webjet shares continue to gradually recover from the devastating 75% pandemic-fuelled drop that occurred in early 2020. The company has trimmed costs and is benefitting from a rapid return of domestic and international travel.

In November, Webjet reported its half-year underlying net profit after tax (NPAT) had returned to profit, albeit a slim one. Revenue was up 217% year on year. With global travel expected to continue rising, I believe Webjet is well-positioned to capitalise on that growth.

Indeed, analysts at Goldman Sachs forecast the company will increase earnings at a six-year CAGR of 15.3%. Goldman has a $7.20 price target on Webjet shares, around 2% above the current price.

The Webjet share price is up around 14% in 2023.

Motley Fool contributor Bernd Struben does not own shares in Webjet Limited.

Treasury Wine Estates Ltd

What it does: Treasury Wines is the name behind such wine brands as Penfolds, Wolf Blass, and 19 Crimes. It owns 11,300 hectares of vineyards and sells wine to more than 70 countries.

By Brooke Cooper: The Treasury Wine share price was hit hard by the COVID-19 pandemic and tariffs that China imposed on Aussie wine exports. Its share price is still almost 24% lower than it was in January 2020.

Of course, the company could benefit if Australia's trade relations with China were to thaw. However, even if they don't, Treasury Wines is still posting solid growth.

The company's earnings jumped 17% last half, while its post-tax profit lifted 72.5% to $188 million.

And Morgans is tipping that to continue, with Treasury Wine forecast to post double-digit earnings growth from now until financial year 2025.

Motley Fool contributor Brooke Cooper does not own shares in Treasury Wine Estates Ltd.

Xero Limited

What it does: Xero provides cloud-based accounting software for accountants, bookkeepers, small business owners, and financial advisors. Users can access the software anywhere, at any time. It provides a number of automated and time-saving features.

By Tristan Harrison: The Xero share price has taken a steep dive since November 2021, down 45%. I think it's now great value, especially considering the company continues to grow strongly.

Xero's FY23 half-year operating revenue jumped by 30% to $658.5 million, while its total subscribers increased by 16% to 3.5 million. It also has a very high gross profit margin of 87%.

Strong gross profit growth enables the business to invest heavily for growth (marketing, as well as research and development). I think this investment is the best plan for long-term shareholder value creation.

Xero is expecting its profit margins to improve in the coming results, which I think will show how profitable the underlying operations actually are. With a retention rate of over 99%, I think it has a very promising future.

Motley Fool contributor Tristan Harrison does not own shares in Xero Limited.

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

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.

It's been a very positive start to the trading week so far this Monday for the S&P/ASX 200 Index (ASX: XJO). At this point of the trading day, the ASX 200 has gained a healthy 0.8%, putting the index at just over 7,340 points. But ASX 200 tech stocks like Xero Limited (ASX: XRO) are putting that gain to shame. 

The ASX 200 tech sector is currently leading the market in terms of gains. And the top ASX 200 gainers today are almost all tech shares. Xero is in the vanguard here, recording a very pleasing gain of 4.88% so far this session to $79.31 a share:

But it's not just Xero. Block Inc (ASX: SQ2) has notched a 5.4% rise to $120.42 a share. Megaport Ltd (ASX: MP1) is just behind with a 5.1% gain to $5.78 a share. WiseTech Global Ltd (ASX: WTC) has just hit a new record high. And Brainchip Holdings Ltd (ASX: BRN) has rocketed by a whopping 17.65% to 60 cents a share.

So what's going on with ASX 200 tech stocks today that have yielded such stellar performances?

Why are ASX 200 tech stocks on fire this Monday?

Well, Brainchiop has had some specific developments which seem to be boosting the company's share price. As we covered this morning, Brainchip has announced the launch of its second-generation Akida platform, which seems to be getting investors hot under the collar.

But apart from that, there are no other specific announcements from these ASX 200 tech stocks that seem to be a factor here.

As such, we can probably thank the performance of the US tech markets on Friday night (our time) for the strong start to the week that the tech sector is currently enjoying.

The ASX is usually quite receptive to the movements of the US markets, given their dominance of global financial markets. If US shares have a good run, it's unusual not to see ASX shares follow suit (and vice-versa). And ASX 200 tech stocks seem to be particularly sensitive to the movements of their American counterparts.

Last Friday, the tech-heavy NASDAQ-100 Index (NASDAQ: NDX) had an exceptionally strong session, rising by 2.04% by the end of the trading day. US shares like Amazon, Apple, Microsoft and Tesla all shone, with Amazon, Apple and Tesla rising by more than 3% each. It was a similar story with other prominent US tech shares like Adobe, PayPal and Intuit.

So given the magnitude of these gains enjoyed by US tech investors last week, ASX 200 tech stocks were always going to have a strong day back across the Pacific.

The post Why are ASX 200 tech stocks like Xero having such a stellar start to the week? appeared first on The Motley Fool Australia.

To narrow things down, I have picked out a couple of ASX 200 shares that analysts are particularly positive on.

Here's why these could be quality options on the ASX 200 index:

Treasury Wine Estates Ltd (ASX: TWE)

The first ASX 200 share that is highly rated is Treasury Wine. It is one of the world's largest wine companies and the owner of a collection of popular brands such as 19 Crimes, Penfolds, and Wolf Blass.

The team at Morgans has tipped Treasury Wine as a buy. The broker believes that its shares are trading at a very attractive level compared to global peers, especially given its belief that the company can grow strongly in the coming years.

Its analysts "expect TWE to deliver double digit earnings growth over 2H23/FY24/FY25."

Morgans has an add rating and $15.05 price target on the company's shares.

Xero Limited (ASX: XRO)

Another ASX 200 share that has been named as a buy is Xero. It is one of the world's leading cloud-based accounting solution platform providers.

Xero has been a strong performer in recent years and continued this positive trend in FY 2022 despite operating in a tough environment. The company reported a 29% increase in revenue to NZ$1.1 billion and a 28% jump in annualised monthly recurring revenue (AMRR) to NZ$1.2 billion. This was supported by a 19% increase in total global subscribers to 3.3 million.

The good news is that  3.3 million is still only a small slice of its total addressable market of 100 million small businesses globally according to Goldman Sachs. Thanks to this and its plan to further monetise its growing user base, the broker believes Xero has a very long growth runway.

As a result, its analysts currently have a buy rating and $109.00 price target on its shares.

The post These are the ASX 200 shares to buy in March: experts appeared first on The Motley Fool Australia.

These shares have been named as buys and tipped to climb meaningfully from current levels. Here's what you need to know:

ResMed Inc. (ASX: RMD)

The first ASX 200 growth share to buy could be ResMed. It is a medical device company with a focus on the sleep disorder treatment market. It has been tipped to continue growing at a solid rate long into the future thanks to its large and growing market opportunity. The latter is estimated to comprise almost one billion people with sleep apnoea globally and a little under half a billion people suffering from chronic obstructive pulmonary disease (COPD). And as the majority of these people are undiagnosed, ResMed has a long runway for growth.

Morgans is bullish on ResMed and has an add rating and $37.24 price target on its shares.

Pilbara Minerals Ltd (ASX: PLS)

Pilbara Minerals could be another ASX 200 growth share to buy. It is one of the largest lithium miners in the world and the owner of a collection of high quality assets. Morgans is also very positive on Pilbara Minerals and believes its shares been oversold recently. Especially given its belief that "demand in the Chinese market could increase [for lithium] from March onwards."

Morgans currently has an add rating and $4.70 price target on this lithium miner's shares.

Xero Limited (ASX: XRO)

A final ASX 200 growth share that has been named as a buy is Xero. It is a cloud-based accounting solution provider to millions of small businesses globally. While the company is generating significant recurring revenue from its 3.3 million subscribers, it is nothing compared to what it could be in the future. Goldman Sachs estimates that it has a total addressable market of 100 million, which gives Xero a huge growth runway over the next decade or two.

Goldman Sachs has a buy rating and $109.00 price target on its shares.

The post 3 incredible ASX 200 growth shares to buy: analysts appeared first on The Motley Fool Australia.

I think it's understandable that some asset prices have been hit. Higher interest rates lead to stronger returns from 'safe' assets like term deposits, making riskier assets like shares worth a bit less than they used to be.

But, those businesses are still the same companies they were a year ago. I think it just means we can buy them at better value now. With that in mind, these are the three ASX 200 growth shares I'd pounce on right now.

Xero Limited (ASX: XRO)

Xero is one of the world leaders when it comes to cloud accounting software, in my opinion. It has a very strong position in Australia and New Zealand, it's growing strongly in the UK, and it has ambitions in a number of other countries including the US, Canada, South Africa, and Singapore.

I think that some investors are underestimating how profitable Xero is because it's spending most of its revenue growth on further growth activities like marketing and product development.

When I look at some of the numbers, I really like what I see. In the FY23 first half, the gross profit margin was 87%, operating revenue increased by 30% to $658.5 million, and the average revenue per user (ARPU) increased by 13% to $35.30.

With the Xero share price down 45% since the end of 2021, I think it's now at a great price to invest in for the long term.

Johns Lyng Group Ltd (ASX: JLG)

Johns Lyng describes itself as an integrated building services business. Its core business is rebuilding and restoring properties and contents after damage through insured events such as impact, weather, and fire.

Customers include major insurance companies, businesses, local and state governments, owners' corporations, and retail customers.

I think this business is exposed to strong tailwinds, particularly climate change. The more unfortunate weather events there are, the more activity there is for Johns Lyng to help with.

In the company's FY23 half-year result, it upgraded its guidance for the rest of the financial year.

It noted that its earnings were being upgraded because of "strong earnings growth" for both its business-as-usual (BaU) work as well as catastrophe work. HY23 earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 63%. The dividend was increased by 66.7%.

The ASX 200 growth share said that the trend of workflows from catastrophe events is "larger and longer lived". Work from previous events is carrying over into the current financial year. As such, it's seeing a "more sustainable earnings profile" for that division, though this is tied to unpredictable events.

The Johns Lyng share price is down more than 30% since April 2022.

Lovisa Holdings Ltd (ASX: LOV)

I think Lovisa is one of the ASX-listed businesses that has a strong chance of being a global growth contender.

The ASX 200 growth share sells affordable jewellery to younger shoppers. But what I like about the business is that it's expanding its retail store portfolio across the world.

In the second half of FY22, it had 586 stores. A year later this figure had grown to 715. It's growing its presence in places such as Australia, New Zealand, Malaysia, Hong Kong, the UK, South Africa, France, Germany, Italy, Poland, the US, and Mexico. The business is also looking to grow its digital sales and capabilities as well.

It's looking to continue its global rollout in both existing and new markets.

The business reported HY23 net profit after tax (NPAT) growth of 31.9%, with a slight increase in the dividend. Not bad for a business spending a lot of cash on growth.

Commsec numbers suggest the Lovisa share price is valued at just 20 times FY25's estimated earnings. I think it could grow strongly over the rest of the decade, combined with a decent dividend as well.

The post These are my top ASX 200 growth shares to buy today appeared first on The Motley Fool Australia.

Here's what the broker is saying about them:

ResMed Inc. (ASX: RMD)

The first ASX 200 growth share that has been tipped as a buy is ResMed. It is a medical device company with a focus on sleep treatment solutions.

Goldman Sachs is a fan of ResMed and has a buy rating and $38.00 price target on its shares. The broker likes the company due to its strong position in the sleep treatment market and its opportunity to win market share due to a competitor recall.

All in all, the broker expects double digit earnings growth through to at least FY 2026. It said:

The timing/nature of Philips' re-entry into the market remains an important debate, but under most realistic scenarios we continue to expect an excess demand dynamic through end-2023. Whilst supply shortages and cost inflation mitigated the tailwind from these competitor challenges through FY22, we believe the benefits to RMD are significant, and could continue to accrue over many years. As operational pressures continue to ease we see margin/cost dynamics improving, supporting a favourable earnings trajectory through the long term. We currently model an EPS CAGR of +11% (FY23-26E), with potential upside depending on how competitive/regulatory dynamics develop.

Xero Limited (ASX: XRO)

Another ASX 200 growth share that Goldman Sachs rates highly is Xero.

It has a buy rating and $109.00 price target on the shares of this cloud-based accounting and business platform provider to small and medium sized businesses globally.

Its analysts rate Xero highly due to its massive total addressable market (TAM) and favourable tailwinds. The broker explained:

We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$76bn TAM. Following the recent underperformance (absolute/relative), we see an attractive entry point into a compelling global growth story and our preferred large-cap technology name in ANZ, and are Buy rated (on CL).

The post Buy these ASX 200 growth shares: Goldman Sachs appeared first on The Motley Fool Australia.

While most investors rightly focus on business performance or structural tailwinds in picking ASX shares to buy, there is another factor that could materially boost the fortunes of a stock.

That is takeovers.

"Identifying companies that will make suitable takeover targets can make for very lucrative investments," Wilsons equities strategist Rob Crookston said in a memo to clients.

"Normally, companies are acquired at a significant premium to their latest share price, and any hint of a possible acquisition can trigger positive momentum even before a bid is announced."

After 2022 saw many non-mining S&P/ASX 200 Index (ASX: XJO) shares fall in value, big institutional investors like superannuation funds and private equity firms are "still on the hunt for high-quality assets at a fair price".

Growth stocks slashed to clear

One set of companies that are "vulnerable" to acquisitions are growth stocks.

It's because they are going for cheap at the moment.

"These stocks have underperformed during periods of rising bond yields and outperformed when bond yields have fallen," said Crookston.

"2022 was no different. The quick-fire rise in bond yields was a significant headwind for growth stocks in 2022."

To demonstrate, the S&P/ASX All Technology Index (ASX: XTX) is still more than 33% lower than November 2021, despite a 10% revival this year.

Crookston noted that takeover bids have already been seen for technology shares such as Nitro Software Ltd (ASX: NTO), Tyro Payments Ltd (ASX: TYR), and ELMO Software Ltd (ASX: ELO).

The next great takeover targets?

So Wilsons analysts set out to find the ASX 200 shares that might become the next takeover targets.

"Our search is looking for more of these opportunities at the larger end," said Crookston.

"We have looked for stocks that have derated significantly over 2022 that offer substantial growth potential."

These are the seven ASX companies that Crookston's team came up with:

• Xero Limited (ASX: XRO)
• Domain Holdings Australia Ltd (ASX: DHG)
• PEXA Group Ltd (ASX: PXA)
• Netwealth Group Ltd (ASX: NWL)
• Iress Ltd (ASX: IRE)
• Altium Limited (ASX: ALU)
• NEXTDC Ltd (ASX: NXT)

The analysts said that Domain is attractive for acquisition because of its "strong market position" that's effectively a duopoly.

"Looks oversold on negative housing sentiment, but likely to grow earnings over the cycle."

Cloud accounting software provider Xero has seen its share price halve since November 2021.

"High multiple might deter but has de-rated heavily over the year," read the Wilsons memo.

"SaaS [software as a service] business with recurring revenue. Strong growth with the potential for substantial cost out."

Another software company, Altium, is undergoing some pain at the moment but will be tempting for savvy institutional investors seeking growth in the medium term.

"Transition to SaaS business causing slight disruption (margins contraction) but should be short-term," read the memo.

"High quality business that is taking market share."

The post 7 ASX 200 growth shares to buy for possible takeovers: expert appeared first on The Motley Fool Australia.