I’ve got my eyes on a number of ASX shares that could be able to produce a lot of growth over the long-term.
Businesses and investments that can compound profit higher and higher have a good chance of producing attractive returns over time.
In my opinion, these two ASX shares are ones to watch:
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Some investors seem to think that investing ‘ethically’ can lead to reduced long-term returns. I think this exchange-traded fund (ETF) shows that’s not the case.
This ETF gives investors exposure to businesses that are identified as “climate leaders” in their industries. It also excludes businesses that have a substantial exposure to activities like fossil fuels, gambling, tobacco, alcohol and other industries that are deemed inconsistent with responsible investing.
There are a number of globally-recognised names at the top of its portfolio including Nvidia, Visa, Apple, Home Depot, Mastercard, PayPal, ASML, Toyota, Adobe and Cisco Systems.
In total it has 200 holdings spread around the world, which means it’s appropriately diversified in my opinion.
For an ethical portfolio investment, its management costs aren’t bad at all at 0.59% per annum.
Past performance is no guarantee of future performance, but since the ETF started in January 2017, it has produced average returns per year of 21.9%. These are high-quality holdings that have generated that return.
Adore Beauty Group Ltd (ASX: ABY)
Adore Beauty is an e-commerce business that sells hundreds of brands and thousands of products to Aussies and New Zealanders.
The difficult COVID-19 period has shown us how quickly online shopping businesses can grow.
According to Frost & Sullivan, the beauty and personal care market in Australia is worth $11.2 billion and is expected to grow at a compound annual growth rate of 26% to 2024. Online sales only make up 11.4% of the pie. This is a lower percentage compared to the US, the UK and China.
Adore Beauty is looking to grow its market share with disciplined marketing to increase customer awareness, win new customers and improve retention.
Given the largely fixed nature of the cost base, the company is expecting scale benefits to improve operating leverage and deliver an EBITDA margin (EBITDA explained) expansion in the longer-term as it continues to grow revenue.
In the third quarter of FY21, Adore Beauty saw revenue rise 47% to $39.4 million and active customers rose 69% to 687,000 – both of those are year on year growth rates. The business said it’s seeing strong retention and re-engagement rates.
It’s on track to achieve full year FY21 revenue growth of between 43% to 47%.
There are plenty of other ASX growth shares out there that could also be interesting options.
