There are a handful of ASX shares that could be worth owning well into the 2030s. I think theses ASX shares could deliver excellent compound growth over the long term if they can continue doing what they’re doing.
If investors can find winners for the long term and hold onto them then they can make excellent returns. Holding for the long term also reduces the amount of brokerage and taxable gains that investors might face. With that in mind, I’d love to own these ASX shares for the next decade or two:
Kogan.com Ltd (ASX: KGN)
Kogan.com isn’t a favourite of some fund managers, but I think that it actually has everything that could make it into a long term winner.
It has an enormous addressable market. It’s steadily adding more products and services onto its website – eventually it may sell everything that you could buy over the internet. Insurance, furniture, devices, you name it – it already sells a huge range.
A key benefit of this e-commerce model is that a good portion of new revenue can become profit because the website has already been designed, the warehouses are already there and so on. Kogan.com has solid and growing profit margins. For example, in the latest result – the FY21 half-year report – gross sales grew 97.4%, net profit went up 164.2% and the EBITDA margin (EBITDA explained) improved by 1.8 percentage point to 9.4%.
Kogan.com can grow into new verticals, expand into New Zealand (and other countries), grow profit margins and acquire other businesses.
To me, it looks very good long term value at around 20 times the estimated earnings for the 2023 financial year, according to CommSec.
WCM Global Growth Ltd (ASX: WQG)
I think certain listed investment companies (LICs) are also worth thinking about if they can generate really strong returns and invest differently to how you normally do. WCM Global Growth is a LIC ASX share where the portfolio is managed by WCM – a fund manager based out of California.
Its investment strategy is to look for businesses that have a rising competitive advantage, also known as an expanding economic moat. The other thing WCM looks for is a corporate culture that supports the expansion of this moat.
WCM believes that the direction of a company’s economic moat is more important that the size of that moat.
That’s why WCM looks for companies that have a rising return in invested capital (ROIC). In other words, WCM looks for businesses that are getting stronger and that this is coming through with tangible results economically.
WCM also strongly believes that corporate culture is a key part of how a business can achieve a consistently growing moat. The fund manager says it has developed a unique way to judge this.
It’s clearly working because since inception in June 2017, its investment portfolio has returned an average of 19.26% per annum after management fees and performance fees, outperforming the global index by around 7.5% per annum.
At the end of February 2021, some of its leading positions were MercadoLibre, Taiwan Semiconductor, Shopify, Stryker, West Pharmaceuticals, LVMH and Visa.
Summary thoughts
I think both of these ASX shares have very good growth potential over the long term. Kogan.com has so many growth levers it can pull, whilst paying shareholders a fast-growing dividend. WCM Global Growth is quality LIC and one that will hopefully continue to generate good returns with strong global picks, whilst steadily increasing the dividend for long term shareholders.
Two of the other ASX growth shares that could be really good long term picks are Pushpay Holdings Ltd (ASX: PPH) and Altium Limited (ASX: ALU).
