The ASX has produced some incredible long-term wealth creators.
Think about shares such as REA Group Ltd (ASX: REA), Pro Medicus Ltd (ASX: PME), and TechnologyOne Ltd (ASX: TNE).
They have demonstrated how rewarding it can be when a company keeps growing earnings over many years, delivering average total returns of over 15% per annum over the past 15 years.
For example, a $10,000 investment growing at an average of 15% a year would have become approximately $80,000 over 15 years, without another dollar being invested.
Of course, returns like that are far from guaranteed. But it demonstrates why finding a business capable of growing for decades can be so rewarding.
The biggest challenge is recognising one before most of its growth has happened.
The good news is that I’ve identified three ASX shares that I believe deserve attention.
The first is Life360, which has built a family safety platform offering location sharing, driving reports, crash detection, and other services.
What I like about the ASX tech share is the size of the audience it has already built and how much more valuable that audience could become.
At the end of June, the company had 102.4 million monthly active users globally. Around 54 million were in the United States, with another 48.4 million elsewhere.
I see little reason why Life360’s international business couldn’t eventually become significantly larger than its US operations, particularly as awareness of the platform increases globally.
And because most people use the service for free, there is plenty of room to increase revenue through paid memberships, advertising, and additional services as the audience grows.
There is still a lot of work to do, particularly when it comes to generating more revenue from international users. But if Life360 can keep expanding its audience while converting more users into paying customers, I think it could be a significantly larger and more profitable business in another decade.
However, Life360 isn’t the only business that caught my attention.
The next company has recently secured billions of dollars in contracts, potentially transforming its growth outlook. The third has an entirely different opportunity that could allow it to keep growing for many years.
Another ASX share that I think has the potential to become a great compounder is Megaport.
It originally made its name helping businesses connect quickly and easily to cloud providers and data centres.
That is still an attractive market to operate in. As companies use more cloud services and move increasing amounts of data around the world, demand for flexible connectivity should continue growing.
But Megaport’s acquisition of Latitude.sh has been a game-changer and opened up a much larger opportunity.
The company can now provide computing capacity alongside its existing networking services, giving it exposure to the enormous investment taking place in artificial intelligence (AI) infrastructure.
And it hasn’t taken long for this strategy to start producing results. Since April, Megaport has announced approximately $2.3 billion in strategic AI infrastructure contracts.
Those agreements have already prompted management to upgrade its FY 2027 revenue guidance to between $720 million and $810 million.
That’s more than double the $312.2 million it recorded in FY 2026.
It is worth remembering that building and operating AI infrastructure requires substantial investment, with Megaport expecting capital expenditure of approximately $1.8 billion in FY 2027.
It also needs to deliver the projects successfully and generate attractive returns on that investment.
But if Megaport can demonstrate that its expanding infrastructure business is capable of generating strong and sustainable cash flows, the opportunity could be enormous.
Netwealth Group Ltd (ASX: NWL)
A final ASX share that I think deserves attention is Netwealth.
It operates in a market that most Australians are already familiar with. That is superannuation and investing.
The company provides the technology and administration services used by financial advisers to manage their clients’ wealth.
And I think it has an excellent opportunity to keep taking market share from older investment platforms.
One reason is that advisers increasingly want sophisticated systems that make it easier to manage portfolios, produce reports, and offer clients a wide range of investments.
Netwealth has invested heavily in its technology to meet those needs.
Once advisers move their clients onto the platform, those relationships can also be difficult to replace. Switching providers can involve significant work, particularly when large numbers of client accounts are involved.
This gives Netwealth an opportunity to keep growing alongside its existing customers while attracting new advisers.
The company’s recent performance shows how well the strategy has been working. At the end of June, Netwealth had $135.7 billion in funds under administration, representing growth of approximately 20% over the previous year.
Management is now targeting net inflows of between $18 billion and $20 billion in FY 2027 and has an ambition to double funds under administration over four years.
If it can achieve anything close to that, I think earnings could grow very strongly.
There are risks, of course. Weaker financial markets could reduce the value of assets on the platform, while competition remains strong.
Netwealth is also defending a class action relating to First Guardian investment options. I wouldn’t dismiss that issue lightly, particularly when trust is so important in financial services.
Nevertheless, I believe Netwealth has a significant opportunity to keep growing as Australians build their retirement savings and advisers seek better technology.
The post [Gated article] I searched for the next great ASX compounder. These shares deserve attention appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has positions in Life360, Megaport, Pro Medicus, REA Group, and Technology One. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Megaport, and Netwealth Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Life360 and Netwealth Group. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
