There are a few ASX share investments that could pay off strongly for investors over the next decade.
Investors that focus on the long-term can see very good results if they choose the right investment. Growth shares that are bought at the right price should turn out very well.
Kogan.com Ltd (ASX: KGN)
The Kogan.com share price has dropped to around $10, but I believe the long-term trajectory is still very positive. It’s one of the best ways to capture the online shopping trend in Australia.
Australians don’t shop as much online as Americans or the British, which means that there’s still plenty of total retail market share growth potential for Kogan.
Short(er) term inventory issues are problematic for the ASX share’s FY21 profit. But I’m thinking about 10 years in the future rather than what’s happening in FY21. Kogan is turning into Australia’s version of a mini Amazon – it sells a huge amount of different items. Kogan can generate higher profit margins as its volumes grow, particularly if third party sellers keep growing on Kogan (which means Kogan isn’t responsible for the inventory and so on).
If Kogan can keep growing earnings per share (EPS) and the dividend, it should be able to deliver solid long shareholder returns over the next decade.
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
The MOAT exchange-traded fund (ETF) could be one of the best ETFs to own for the long term because of how it operates.
This ETF only invests in businesses with strong economic moats, or strong competitive positions. So, whatever the portfolio is at the time it’s a high-quality one.
On top of that, MOAT only invests in businesses that analysts at Morningstar believe are good value compared to their intrinsic value.
That combination of strong businesses at good prices has helped the ETF produce very strong returns – an average of 18.6% per year over the last five years.
Current names in the portfolio include Wells Fargo, Cheniere Energy, Northrop Grumman, Philip Morris, General Dynamics, Alphabet and Berkshire Hathaway.
Xero Limited (ASX: XRO)
Small businesses are the driving force of the economy and the workforce. That’s exactly who Xero provides its cloud accounting services for.
The Xero share price has dropped around 20% over the last month. But I don’t think its prospects are 20% dimmer, it has just been a valuation reduction.
Xero is a very high quality ASX share that is always doing what’s best the long term. It took the prudent approach of being conservative with spending during the worst of COVID-19 and now the business is going back to investing heavily for growth.
The company may seem ‘expensive’ if you’re thinking about this year’s earnings. But in a decade from now it could be a highly profitable business with a leading global market share. Remember, not only is it growing in Australia and New Zealand, but it’s also growing in many other regions like the UK, Singapore and South Africa. It could become a much bigger business if it keeps winning subscribers like it is doing.
