Xero is all about helping small & medium-sized businesses do business. The company, which has over 3 million subscribers, primarily sells accounting software that helps businesses keep books, pay bills and send invoices. But it has gradually developed features useful beyond book-keeping, such as storing files, converting currencies, keeping track of inventories and creating professional quotes.

But even though it is big, the company is aiming to get bigger. The company believes the TAM (Total Addressable Market) is NZ$100bn and that is just the top 3 jobs its software is used for – Accounting, Payroll and Payments. Adjacent Tasks, including other tasks such as inventory, CRM and project management, could be another $39bn.

ReadyTech provides SaaS technology in Australia and operates in three segments: Education, Workforce Solutions and Government and Justice. It offers various cloud-based solutions that help its clients with administration and management. ReadyTech was founded in 1998 and listed on the ASX in 2019 at $1.50 per share. Although it is off its all-time highs, it is still well ahead of its IPO price.

Organisations in all three segments of ReadyTech’s business – Education, Workforce and Government – are experiencing a growing and ongoing migration to cloud and SaaS. This digital transformation across all industries is nothing new, but what is new is that this transformation has been accelerating in the wake of COVID-19 shutdowns as demand soared for technology-driven initiatives to enable remote work, distance learning, new customer experiences and new online sales channels. We think the trend is still in the early days and that ReadyTech is poised to derive a benefit.

For FY24, ReadyTech has advised shareholders to expect organic revenue growth to be in the mid-teens and a 34-35% EBITDA margin. It is aiming to achieve over $160m in organic revenue in FY26 and says its high conviction pipeline of $28m gives it confidence that this can be achieved.

IFM provides cloud-based parts and service software to the global automobile industry. It has over 250,000 active users in 186 countries and it has a healthy geographical mix of revenue (37% from the Americas, 32% from the Asia-Pacific and 31% from Europe). Infomedia can help its customers capture data, provide more personalised service to existing and would-be customers and monitor supply chains.

It has had some difficulties during the pandemic including the difficulty of business development during pandemic restrictions, the volatility in car sales and potential takeover bids falling through.

Looking to FY24, it is expecting revenue of $135-142m but has not given any other guidance besides that. Analysts covering the company expect $140.4m in revenue (up 8%), $59.4m in EBITDA (also up 8%) and 5c EPS, equating to a ~$18.8m profit (nearly double the year before).

We think the company can capitalise on several trends being adopted in the automotive industry including electric vehicles, the dealer agency business model and data-driven marketing.

Breville is a premium kitchen appliances business with a presence in Australia, Europe and the Americas. Breville sells nearly $1.5bn in goods each year in over 100 countries globally and caters to middle to higher-income earners. It is headquartered in Sydney and has manufacturing facilities in China and regional offices in key markets.

Breville was listed in 1999 and has achieved growth of over 2000% since. In the last 10 years, it has gained 200%. In FY23, it generated $1.48bn in revenue (up 4%), $172m in EBIT (up 10%) and a $110.2m NPAT (up 4.2%). It recorded a 35% gross margin. The 4% revenue growth is hardly earth-shattering but follows 3 years of revenue growth of 19-25%. In 1HY24, it achieved $906m in revenue (up 2%), $131m in EBIT (up 8.2%) and a $84m NPAT (up 6.7%).

We think there are four reasons why Breville can grow. First, it’s a track record of sales growth with 14.6% CAGR in EBIT over the last seven years. While this isn’t a guarantee it can achieve the same results, it does inspire confidence. Second, the company’s experience in successfully entering new markets. The company estimates 70% of its revenue potential is unaddressed and it could ultimately achieve $9.7bn in revenue.

The third reason is the market the company is in. Breville offers premium and functional goods, targeted at consumers with higher disposable income. It is therefore less likely to be hit by a slowdown in consumer spending, at least to the extent of companies targeting lower incomes. Consumers feeling the pinch might view upfront investments in Breville’s products – coffee machines, ovens and juicers – as saving money in the long run. And consumers already with appliances and needing new ones won’t put off purchasing a new one for too long. Fourth, we observe that Breville has not had the same supply chain issues other companies have had. Unlike Kogan (ASX: KGN), Breville did not over-invest in new inventories predicting the boom would go on indefinitely.

Universal Store is a chain of casual fashion stores aimed at Millennial and Gen Z customers (think 18-35 year olds). Universal Store has 79 stores across Australia, which tend to be in major shopping centres, as well as a further 20 or so stores exclusive for particular brands like Perfect Stranger, and the group makes 14% of its sales online. Both curated third-party products and private brand products are sold in-house, although the former dominates.

It is a good business but has been hit by perceptions that its customers will cut back their spending because they feel the brunt of the cost of living crisis. We think the recent Taylor Swift shows and the merchandise spent by them (estimated to be over $60m at the concerts alone) show that they will still spend when they perceive value.

In FY23, total Sales were up $263.1m, up 26.5% overall, although like-for-like sales were only up 1.2%. It made underlying EBIT of $40.4m, up 24%) and an NPAT of $23.6m, up 15%. Not bad in the rising interest rate environment. This was because the company was better able to manage inventory and offset the costs of doing business. We are optimistic for further growth in the next 12 months as the Stage 3 Tax cuts come into effect. The revised package will put more money into the pockets of Universal Store's customer base.