These 2 ASX shares could win big time in the long term

I’ve invested in two S&P/ASX 200 Index (ASX: XJO) shares that add a particular quality to the balance of my portfolio.

Australia is a wonderful country, but if a company can successfully expand overseas, it can significantly increase its addressable market.

That’s why I believe both of the companies below will make a lot more profit in the next three to five years. Let’s take a look.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a retailer of affordable jewellery aimed at younger shoppers. The ASX retail share has successfully expanded its store network beyond Australia.

Its two most significant markets are Australia, with 175 stores, and the United States, with 207 stores. Lovisa has opened at least 10 stores in many other countries, including New Zealand, Singapore, Malaysia, South Africa, the United Kingdom, France, Germany, Poland, and Belgium.

Excitingly, the ASX share has just entered some large markets like China and Vietnam. Lovisa can expand its store network in whichever existing (or new) market it sees opportunities in.

In the 12 months to 31 December 2023, the business reported its store network grew by 139 stores, helping the HY24 earnings before interest and tax (EBIT) increase by 16.3% to $81.6 million.

As the company grows internationally, I think its store count can double in the next five years, which could lead to roughly doubling of net profit, too, because of the scale benefits of more stores in countries where it’s already operating.

According to Commsec’s earnings forecast, the Lovisa share price is valued at 27x FY26’s estimated earnings.

Johns Lyng Group Ltd (ASX: JLG)

Johns Lyng provides building and restoration services across Australia and the US. Its core offering is rebuilding and restoring various properties and contents after damage by insured events, including impact, weather, and fire events.

It also has a division involved in catastrophe work in Australia and the US.

The FY24 first-half result saw the ASX share’s insurance building and restoration services (IB & RS) division revenue rise 13.7% to $426.1 million, and the business as usual (BAU) IB & RS earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 28.1% to $55 million.

Double-digit growth for the core segment makes me optimistic the company can compound its earnings for several years ahead.

I think the company’s geographic expansion is compelling. The US is a vast market, and the ASX share was recently appointed to the Allstate emergency response and mitigation panel. Allstate is one of the largest insurance companies in the US.

Johns Lyng has also recently expanded into the New Zealand market, opening up another growth avenue. I’m not relying on this, but it’s possible the ASX share could expand to additional countries in the future.

I also like the company’s move to expand into the strata management sector through acquisitions to diversify and grow earnings — it could unlock beneficial synergies between its business segments.

According to the estimate on Commsec, the Johns Lyng share price is valued at 23x FY26’s estimated earnings.

The post These 2 ASX shares could win big time in the long term appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Johns Lyng Group and Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group and Lovisa. The Motley Fool Australia has recommended Johns Lyng Group and Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.