ASX growth shares could be some of the best names to own for the long-term.
So, I’m going to outline two ideas where the businesses could be significantly larger in five or so years.
Guzman Y Gomez Ltd (ASX: GYG)
GYG is a Mexican restaurant name that many capital city locals may already be aware of. It has a drive-through offering, giving it strong unit economics and the ability to serve many more customers than just being a restaurant.
The company is growing at a very impressive pace, with FY26 showing strong performance.
Network sales increased 17.9% to $1.38 billion, underlying EBITDA rising 28.7% to $85 million and underlying net profit growing 29.7% to $53.4 million.
Pleasingly, both Australian network sales and Asia network sales grew by 17.9% or the ASX growth share.
The company has an excellent opportunity to grow its restaurant networks in both Australia and Asia in FY27, which it has plans to do.
It expects to open 35 new restaurants in Australia, while the franchise networks in Singapore and Japan are both expected to expand.
On top of strong network sales growth, profit margins are also expected to increase thanks to operating leverage. The underlying EBITDA margin as a percentage of network sales to expand to between 6.7% to 6.9% in FY27, compared to 6.2% in FY26. This should be very helpful for the reported profit.
Based on Commsec projections, the ASX growth share is priced at 30x FY29’s estimated earnings.
VanEck MSCI International Small Cos Quality ETF (ASX: QSML)
The ASX isn’t the only place to find growing businesses with exciting futures.
This exchange-traded fund (ETF) aims to give investors exposure to 150 of the world’s highest quality small companies based on three key fundamentals – a high return on equity (ROE), earnings stability and low financial leverage. Additionally, small businesses have a much longer growth runway than already-mature businesses.
A high ROE means it’s very profitable for shareholders, stable earnings hopefully means no negative surprises and steady earnings growth, while low debt is usually a healthier choice for a business.
While the names may change in the portfolio, some of the largest positions in this global portfolio are Woodward, Royal Gold, ITT Inc, East West Bancorp, Medpace and Lincoln Electric.
When inflation and interest rates start lowering again, I think this could be a very promising investment in the ASX growth share space.
