Why I think these ASX 200 shares could outperform the market over 10 years

The ASX 200 has plenty of solid businesses, but I think only a smaller group of shares has the ingredients to outperform over a full decade.

For me, that usually means a company has exposure to a long-term growth trend, a strong competitive position, and enough reinvestment opportunity to keep getting bigger.

Here are three ASX 200 shares I think fit that description.

NextDC Ltd (ASX: NXT)

NextDC is one of my preferred ways to gain exposure to the growth in digital infrastructure.

The company operates data centres, which provide the physical infrastructure needed for cloud computing, artificial intelligence (AI), enterprise software, and data-heavy applications.

What I like about NextDC is that it sits underneath many of the trends investors are excited about. It does not need to pick the winning AI model or software platform. It provides the infrastructure that many of those businesses need to operate. 

That can be a powerful place to be. 

Data centre demand is also becoming more complex. Customers increasingly need secure, reliable, well-connected facilities with access to power and scale. NextDC has been investing heavily to meet that demand.

While this investment can weigh on short-term earnings, over 10 years, I think that investment could support material earnings growth.

Data centres are capital intensive, and execution will be important. But if demand for AI, cloud, and digital infrastructure keeps growing, I think NextDC shares have a real chance to outperform.

Breville Group Ltd (ASX: BRG)

Breville is a very different kind of growth story. It is a global consumer products company best known for premium kitchen appliances, especially coffee machines. 

That may sound less exciting than AI or data centres, but I think Breville has something many consumer businesses lack: brand power.

The company has built a reputation for quality, design, and innovation. That allows it to sell into higher-value categories and build loyalty with customers who care about the experience, not just the cheapest price.

I also think Breville still has plenty of room to expand internationally.

The at-home coffee trend remains attractive, and Breville has opportunities across North America, Europe, and other markets. It can also keep growing by broadening its product range and deepening its presence in premium kitchen categories.

Consumer spending can be uneven, particularly when interest rates are rising. But over a decade, I think a strong global brand with pricing power and product innovation can keep compounding.

DroneShield Ltd (ASX: DRO)

DroneShield is the higher-risk ASX 200 share pick, but I think it could also have the most upside.

The company develops counter-drone technology used to detect, track, and respond to drone threats.

This is still an emerging market, but I believe it could become increasingly important over the next decade. Drones are becoming cheaper, more capable, and more widely used across military, security, and commercial settings. That creates a growing need for defence and protection systems.

What interests me is that DroneShield is not trying to enter an old market with established rules. It is operating in a category that is still being built.

That can create volatility, especially because contract timing can be lumpy and investor expectations can shift quickly. But if counter-drone systems become a normal part of defence budgets, airport security, prisons, public events, and critical infrastructure protection, then the opportunity could be much larger than it is today.

I would size this position carefully. But over 10 years, I think DroneShield has the kind of structural growth exposure that could support market-beating returns if execution remains strong.

Foolish takeaway

Outperforming the market over 10 years is never guaranteed.

But I think NextDC, Breville, and DroneShield each have something that could help them do it.

NextDC is building the infrastructure behind the digital economy. Breville is turning a premium consumer brand into a global growth story. DroneShield is exposed to a security market that could become far more important over time.

For patient investors, I think all three could be worth considering for long-term growth.

The post Why I think these ASX 200 shares could outperform the market over 10 years appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.