At the weekend I looked at how successful $20,000 investments had been in a number of popular ASX shares over the last 10 years.
But that was then and this is now. So, I thought I would take a look at three shares which I think could generate very strong returns for investors over the next 10 years.
Here’s why I would invest $20,000 in these ASX shares:
a2 Milk Company Ltd (ASX: A2M)
This infant formula and fresh milk company’s shares have been incredibly resilient during the recent market volatility. In fact, they are up around 30% since the start of the year. The good news is that I don’t think it is too late to invest with a long term view. Especially given the demand it continues to experience for its infant formula products in the lucrative China market. I believe this and its expanding fresh milk footprint will continue to underpin strong earnings growth over the next decade.
Kogan.com Ltd (ASX: KGN)
Another company to consider investing $20,000 into is Kogan. It is a growing ecommerce company and Australia’s answer to Amazon. I think it is a great long term option for investors due to the continued shift to online shopping in the country. An estimated ~10% of retail spending is made online at the moment in Australia. I expect this number to grow materially over the next decade and beyond, which will only benefit Kogan.
Xero Limited (ASX: XRO)
I think this cloud-based business and accounting software provider would be a great place to invest $20,000. This is due to its global market opportunity, the quality and stickiness of its product, and its strong pricing power. The latter two are evident in both its customers numbers and churn rate. During the first half of FY 2020, Xero grew its subscribers by 30% to 2.057 million and reported a churn rate of just 1.1%. This was despite it lifting its prices in some markets. In respect to its market opportunity, it is estimated that less than 20% of the global English-speaking SME market is using cloud-based accounting software. I believe this gives it a massive runway for growth. Though, with its full year result due later this week, it might be worth holding fire until that release.
In the meantime, here are five dirt cheap shares that could be great options for a $20,000 investment.
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Returns as of 7/4/2020
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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