Australians have been watching the world superpowers eat their own tails since the beginning of the year. China’s real estate market crashed.

Russia’s currency is worthless. And the United States is likely going into another recession brought on by banking troubles a toddler could identify.

Of course, since Australia pegs its currency to the United States Dollar, it does feel the impact of this instability. But what is the best response to it?

Buying a dip in the stock market is like trying to catch a falling knife: Impressive if you succeed, painful if you fail. And that’s on a good day. But when the whole world is in turmoil, it’s more akin to catching the Sword of Damocles. With your teeth.

So, the market is dangerous when it’s plummeting like this. But one of the beautiful things about the stock market is the fact that whether it goes up or down, there is always money to be made. If it is going up, then you buy broadly and reap the rewards. If it’s going down, then you can get some great deals.

That is what we are on the lookout for today. When the market is plummeting, the name of the game is growth stocks. Of course, growth stocks can mean a couple of different things.

Table of Contents:

• The Two Flavours of Growth Stocks
• But Which Growth Stocks are the Best
• Top 10 ASX Growth Stocks

The Two Flavours of Growth Stocks ↗️

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There are two kinds of growth stocks in the world. Knowing which one to buy comes down to understanding them and evaluating which suits your investing style better.

Traditional Growth Stocks

The most common that you will find people investing in are “traditional growth stocks”. These are stocks that are expected to grow in the next ten to fifteen years. When you are looking for this kind of growth stock, you are looking for the next Facebook, Amazon, or Apple.

These are the kinds of growth stocks you want to get into at the end of a recession, however. It would be amazing if you could get in on this kind of stock right now, but as it stands it is almost impossible to tell who is going to survive and who is going to wither away under the pressure of the recession.

Dividend Growth Stocks

On the other side of things are “dividend growth stocks”. These are stocks that, rather than growing at an outlandish rate, instead stay at about the same price for as long as they can. When their share price increases, it is usually just to keep up with inflation. So, why would a company let that happen?

Because the purpose of a dividend stock is not to become enormous. It is to pay the “dividend”—the payment that the company makes to shareholders between one and twelve times per year. The cheaper these stocks are, the better your ratio of investment to the dividend payout. So, if a company costs $100 per share and pays out $.10 per share, you’re getting a better deal if they cost $75 per share.

The disadvantage of dividend stocks is that they might go out of business, just like traditional growth stocks. They will also never reach the highs of traditional growth stocks. The advantage is that as long as they stay in business, you still get paid.

But Which Growth Stocks are the Best? 🔝️

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With those definitions out of the way, we can now go over the top 10 growth stocks on the ASX that you need to keep an eye on this year. It has been a stressful year in the world of finance. As we go into the fourth quarter, there is a lot to think about. That’s why we are here to help.

1. Northern Star Resources – Best Overall Growth Stock

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Like many resource extraction companies, Northern Star Resources went through a massive boom in the last seven years. This has been the result of relaxing regulations which have allowed Australian companies to open new mines in countries on the African continent.

Drawbacks

While gold is generally seen as a highly reliable growth stock, the fact that it is so reliant on relaxed regulations means that it has the potential to shrink in value should those regulations become harsher.

Obviously, Northern Star Resources is making so much money for so many people that it’s unlikely this will happen. And once a mine is open in another country, it becomes much harder to regulate. But just the fear of regulation impacting a business can be its own liability.

2. GQG Partners – Best Recent IPO

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But GQG Partners had their IPO early, and to a resounding success. GQG Partners is an “asset management firm”. That means they make their money through buying stocks on the ASX and turning those purchases into profit through some means or another. 

What is really eye-catching about this particular investment firm, however, is their methodology. It is not as if they invest in a highly unique way. They are a standard high-frequency trading firm that uses a combination of trading bots and day traders. The unique thing is what they invest in.

Since their launch in 2021, they have pivoted away from investing in tech stocks, and towards investing in resource extraction. It is their opinion that the tech boom is over, and a resource boom is starting.

Drawbacks

As with any asset management firm, you have to keep a close eye on the financial industry in order to be secure in your investment into GQG. The problem doesn’t lie with GQG, but the rest of the industry. There is so much money borrowing and debt going on in the world of finance that it is easy for a company like GQG to find itself holding a number of assets that do not actually exist.

This is what happened in the crash of 2008. Just be on the lookout for whether it’s happening again.

3. Seven West Media – Best Media Company Growth Stock

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Seven West Media is on this list because they are a company that has been around since the early 90s that endured the hardship of several recessions and at least one market crash. That means they dealt with the dotcom bubble, the 2002 recession, the 2008 crash, and the 2018 mini-recession, to say nothing of the market turbulence of the 2020 pandemic.

How did they accomplish this? Well, they simply have a solid model of both paper and online news publishing. They can get these products out to a lot of customers at a pretty low cost with an increasingly high demand as time goes on. That’s a growth stock if ever there was one.

Drawback

It is not the biggest liability, but everyone kind of knows that print news has been on the decline for a few years. This has resulted in many publishing companies getting rid of their newspapers and going completely online in a panic to avoid losses in revenue. However, the companies that stuck it out (such as Seven West Media) have found that there is a “bottom” to that fall in demand.

The result is that Seven West Media is able to make a profit, but first they had to take a risk. And while that kind of behaviour is good for the company, a growth-focused investor might be wary of it.

4. 29Metals – Best Copper Miner

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As you might imagine, that means that 29Metal’s main product, copper ore, is massively in demand. While the tech industry is seeing a slowdown in growth, the electronics industry is not, meaning that 29Metals is going to have nothing but a boom in its business over the next few years. In fact, Goldman Sachs, the American hedge fund, has called copper “the new oil” for its importance in electric cars.

Electric cars and green energy solutions are really where the big money in the future is going to lie, for reasons we will get into when talking about other companies. But suffice to say, as long as there is electronics in the future, there will be a need for copper, and 29Metals will have business.

Drawbacks

Since the biggest boom in copper needs comes from electric vehicles, that means the growth of 29Metals is intrinsically tied to the growth of the electric vehicle industry. And if you know the electric vehicle industry, then you know that their biggest obstacle is shipping.

A consumer car can easily be converted into an electric car, but a cargo freighter cannot be so easily changed over. Advances are being made in that direction, but they have been slow. If that limit cannot be broken, the demand for 29Metals will hit a wall.

5. City Chic Collective – Best Retail Growth Stock

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And indeed, some fashion and clothing retail stores had the same thing happen to them. But that is because those particular fashion and clothing retailers were operating on the expectation that the market would always be there for them. City Chic Collective was comparatively humble.

Their net income is only $25 million a year, making them one of the smaller clothing retailers out there. But if you look at their number of stores, employees, and operating costs, you will see that this is way above the curve for how much resources they spend to get that $25 million.

Drawbacks

They are a small retailer expected to grow in size, but no one expects them to become the next big thing. Even if they did, they might not be able to handle it. What you can expect out of City Chic Collective is that they grow at the rate of the economy, which is exactly what a growth stock should do.

6. Iluka Resources – Best Multi-Faceted Company

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Eventually they moved towards resource extraction themselves, but they did these things in tandem with each other, doubling the size of their business. And lastly, they also work in the marketing of resource extraction businesses, meaning they are contracted out for lobbying and publicity.

These are three very different industries under one roof. But they have been maintaining themselves in all three for years, and with the pandemic ending it is their time to shine.

Drawbacks

Of course, that means their operations can feel spread thin for many shareholders. If you are the kind of investor that likes to know every facet of a company, then Iluka Resources will be hard to keep track of.

They also do not operate in the realm of gold or copper. Instead, they mine industrial sand. Basically, it is the stuff that most glass is made of. Industrial sand is a pretty crowded market, so be wary about up-and-comers getting Iluka Resources out of the way.

7. Grange Resources – Best Dividend Stock

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What makes Grange really special though has little to do with the operation of its business. This is the company on the ASX with easily the best dividend yield relative to its growth. That means its stock is cheap, its dividend pays a lot, and it can be counted on to keep growing with the economy.

Drawbacks

But as we mentioned before, companies that pay strong dividends to their shareholders tend to grow only as much as the economy grows. You shouldn’t expect Grange Resources to pop off or anything.

8. Tabcorp Holdings – Best Gambling Company

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But that’s just fine for Tabcorp. They are probably the largest gambling companies in the country, producing many of the gaming machines you would use in video poker or slots.

And, surprisingly, they have an unusually high dividend yield. Their stock has been growing year over year as well, so they slightly break the rule of other companies with a dividend growth focus.

Drawbacks

Investors have raised concerns, however, about exactly that growth. You see, if a company gives out a big dividend and becomes known for that dividend, then lowering that dividend might lose them more than it saves them. If they keep that dividend going, then they can lose money to an overpriced dividend. In short, Tabcorp has a huge dividend that might become a liability if they run into trouble.

9. Li-S Energy – Best Lithium Stock

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It is anticipated that as electric vehicles replace gasoline powered vehicles, a lithium shortage will form. This demand will create a massive run on the stocks of lithium mining companies like Li-S Energy.

Drawbacks

Of course, it can just as easily result in such companies being bought out, regulated to death, or nationalised. None of those things are a deal breaker even if they happen, but they do tend to lower stock prices. So, go into lithium knowing that a bull run might give way to a great escape.

10. Clarity Pharmaceuticals – Best Medical Stock

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However, while Clarity Pharmaceuticals is in the business of helping deal with the pandemic, its main focus has been on cancer treatment research. They have their own system for imaging and administering chemotherapy that is leagues above anything else on the market.

Drawbacks

Smaller pharmaceutical companies like this, especially ones with advanced cancer research and treatments, tend to get absorbed into the larger medical industrial complex. You will often get your shares refunded to you if a company you’re invested in gets absorbed, but that can be a hassle.

Just be aware that a runaway success in this industry might have been getting bought out as their goal.

Conclusion 🤔️

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There are lots of different industries to invest in. And within those industries, there are a dizzying number of companies. What you need to look for is the industries that are always there. People always need medicine. They always need materials. They always need clothes.

If you can get your finger on the pulse of what people need, then your growth stocks can pay you back a huge amount in a matter of weeks.

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