The earnings season brought certain Growth Potential Stocks to the fore. Keen watchers among ASX investors scrutinise Best Companies to Invest in at such times. Three such stocks for Long Term Holding are
Nuix Limited (ASX: NXL)
Nuix Limited (ASX: NXL) announced its annual results for FY24 ended 30 June 2024 on 19 August 2024 with the Annualised Contract Value (ACV) of Nuix, reaching $211.5 million as of 30 June 2024, representing a 14.0% increase compared to the previous corresponding period (PCP).
Revenue for the period increased by 20.9% compared to the PCP, amounting to $220.6 million. In constant currency terms, revenue grew by 18.0%, significantly exceeding the target of a 10% rise in constant currency.
Underlying EBITDA, which excludes net non-operational legal expenses, rose by 38.7% compared to the PCP, reaching $64.4 million, a result of robust revenue growth coupled with effective cost management. Statutory EBITDA, which incorporates the effects of net non-operational legal costs, demonstrated a substantial increase for the full year, climbing by 60.2% to $55.9 million.
Net Profit After Tax improved to $5.0 million, a recovery from a loss of $5.6 million in the previous year.
After the full year, Nuix held cash reserves of $38.0 million, reflecting a 29% increase from the prior year and a 59% increase from the first half of the year.
The company is one of the Top Stocks to Invest in as it is experiencing considerable operational growth, particularly highlighted by the recent successful launch of Nuix Neo, which achieved an annual contract value (ACV) two to three times greater than non-Neo sales, offering a promising sales outlook.
QBE Insurance Group Ltd (ASX: QBE)
In the recent period, QBE Insurance Group has achieved significant increase in ROE versus prior period. The company has maintained a prudent debt management strategy, with the debt to total capital ratio consistently within the range of 15% to 30% from FY19 to FY23. Additionally, QBE's regulatory capital has consistently remained at the upper end of its targeted range of 1.x to 1.8x, indicating strong capital adequacy and stability. These factors collectively reflect QBE's effective financial management and strategic positioning to support sustainable growth and profitability in the insurance industry.
QBE Insurance Group is one of those Fundamental Stocks that have made significant strides in improving its operational performance and risk management strategies. The company has consistently enhanced its claims ratio excluding catastrophes, signalling ongoing efforts to boost efficiency across its insurance operations. Furthermore, QBE is actively reducing long-tail reserve risks, which are critical in managing liabilities over extended periods.
Looking forward to 2024, QBE expects a notable reduction in exposure to peak perils, thereby reducing potential volatility in its portfolio. This strategic realignment includes a substantial repositioning of its QBE Re property portfolio, aimed at aligning more closely with its core insurance business and minimizing risk.
RPM Automotive Group Limited (ASX: RPM)
In FY24, RPM Automotive Group Limited (ASX: RPM) achieved strong financial results. Revenue increased by 3.7% to $121.0 million, or by 10.0% when excluding discontinued operations. EBITDA rose significantly by 41.2% from the previous year, reaching $12.5 million.
Operating cash flow also saw a substantial boost, increasing to $7.6 million compared to just $0.9 million in FY23. Additionally, earnings per share (EPS) soared by 127.4% and net profit after tax (NPAT) surged by 275%, reflecting a highly successful year.
The company is poised for continued growth with several strategic initiatives. The Tyre Recycling Project will see its machines fully operational by Q2 FY25, creating a fully integrated tyre recycling operation that repurposes tyres and reduces landfill waste. This initiative will boost RPM's sustainability profile and extend its national reach. Additionally, RPM is launching a new SaaS product suite developed with WHG, aimed at commercial fleet customers.
With a well-defined plan for FY25, the outlook is positive, with anticipated growth in both revenue and earnings.
Source: Company’s Report
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