Two stocks from ASX listed companies, which after a considerable fall, are showing strength. These undervalued stocks, showing a turnaround, could be the best growth stocks to buy now.
Audinate Group Limited (ASX: AD8)
Audinate Group Limited (ASX: AD8) reported an unaudited gross profit of US$7.2 million (A$10.6 million) for Q1 FY25, reflecting a challenging start to the year. Key headwinds included shorter lead times on orders, elevated inventory levels across the supply chain, slower clearance of raw materials by manufacturing customers, and softer-than-anticipated end-user demand. These challenges are expected to persist into Q2 FY25, with gross profit likely to remain in line with Q1 levels. Previously, management had anticipated a slightly lower FY25 gross profit compared to FY24. However, given the softer-than-expected performance in H1 FY25, it is now unlikely that FY25 gross profit will match FY24 levels. Management plans to provide a detailed performance and outlook update following the conclusion of Q2 FY25, expecting a moderately stronger performance in the second half of the year.
FY25 is being positioned as a transitional year for Audinate, one of the potential growth companies, as manufacturing customers work through elevated inventory levels and demand recovery among end-users is awaited. Management remains confident that this transition will last only one year, with growth projected to resume in FY26 alongside normalization of order patterns. Cost growth for FY25 is forecasted at 7%-9%, substantially lower than the 28.5% annual cost growth recorded over the past three years. This disciplined cost approach reflects management’s strategy of balancing near-term financial pressures with continued investments in product development, underpinning long-term growth prospects.
Audinate’s growth strategy remains centered on the increasing adoption of its Dante technology, with over six million Dante-enabled devices deployed globally and over one million devices added annually. As the installed base expands, the company is well-positioned to scale its software platform business, offering enhanced tools for AV professionals to manage and monitor installations. Looking ahead, Audinate plans to launch new AVIO adaptors and a premium version of Dante Virtual Soundcard in H2 FY25. These new offerings are expected to contribute positively to earnings in 2H FY25 and beyond. Additionally, Q1 FY25 design wins increased by 22% year-on-year, a strong leading indicator of future revenue growth as manufacturers continue to embrace Dante solutions. Dante Certification & Training programs, which draw over 4,000 participants monthly, further drive adoption and engagement among AV professionals, supporting Audinate’s global expansion and long-term growth trajectory.
Megaport Limited (ASX: MP1)
Megaport Limited (ASX: MP1) delivered standout financial results for the fiscal year ended June 30, 2024, showcasing strong growth and profitability across key metrics. Total revenue rose 28% year-on-year (YoY) to $195.3 million, driven by heightened demand across all regions. Annual Recurring Revenue (ARR) climbed 14% YoY to a record $203.9 million, underscoring robust momentum in the company’s growth strategy and transformation initiatives. EBITDA surged 182% YoY to $57.1 million, highlighting operational efficiencies and the benefits of Megaport’s pivot towards profitable growth. Notably, FY24 marked Megaport’s first-ever net profit after tax of $9.6 million, a remarkable turnaround of $19.4 million compared to the prior year’s net loss. Positive net cash flow of $28.0 million, representing a $62.5 million YoY improvement, further solidified the company’s financial position, with net cash reaching $61.2 million, up 84% YoY.
Operational performance was supported by disciplined cost management, with direct network costs rising by just 4% (excluding IFRS leasing adjustments), despite growth initiatives. Gross profit expanded 32%, while employee costs as a percentage of revenue fell to 30%, down from 37% in FY23. While increased marketing and sales investments drove higher operating expenses in 2H FY24, these initiatives strengthened Megaport’s go-to-market (GTM) engine, contributing to record sales of access products and Megaport Virtual Edge (MVE).
Looking ahead, Megaport is guiding for FY25 revenue of $214–$222 million and EBITDA of $57–$65 million. The company considered among high growth stocks, remains focused on its global expansion, 100G connectivity rollout, and product innovation, including offerings tailored to emerging sectors such as AI and GPUaaS. Strategic investments in geographic and ecosystem expansion position Megaport as a leader in global network-as-a-service (NaaS) markets. Significant product milestones achieved during FY24 include the launch of Global WAN and enhanced cloud-to-cloud connectivity solutions. These innovations, alongside a shift to solution selling, have enabled Megaport to secure high-value, long-term contracts, expanding its addressable market. With a focus on efficiency, profitability, and innovation, Megaport is well-positioned to sustain long-term growth and disrupt traditional networking markets globally.
Source: Company’s Report
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