According to research by Fidelity, as of the end of 2019, the S&P/ASX 200 Index (ASX: XJO) had generated an average total return of 9.2% per annum over the last three decades.

While the current decade has got off to a bad start, I expect the share market to rebound and generate a similarly strong return over the next 10 years.

But you don’t have to settle for the market return. I believe there are a large number of quality shares on the local share market with the potential to outperform the market.

As a result, if you are able to make regular investments into their shares over the period, you could end up with a small fortune.

For example, a $2,500 annual investment for 10 years into a share earning a total return of 11.7% per annum (2.5% greater than the market average) would grow into just under $50,000.

Of course, the more you invest, the greater the potential return. If you can afford to invest $3,000 each year, your investments would be nearing $60,000 after 10 years. If you can put $10,000 in, you’re looking at almost $200,000.

But which shares could beat the market over the next 10 years? Three that I think have the potential to be market beaters are listed below:

Appen Ltd (ASX: APX)

The first option to consider is Appen. As a leading developer of high-quality, human annotated datasets, its looks exceptionally well-positioned to benefit from the machine learning and artificial intelligence (AI) boom. Especially given its leadership position in the industry and its relationships with some of the world’s biggest tech companies. I expect demand to grow over the next decade and underpin strong earnings growth.

Kogan.com Ltd (ASX: KGN)

Another option to consider is Kogan. It is a growing ecommerce company which looks well-positioned for long term growth thanks to the shift to online shopping. At present approximately 10% of all retail spending is made online. I expect this to increase over the next decade and for Kogan to continue growing its market share and ultimately its earnings.

ResMed Inc. (ASX: RMD)

Finally, I think this sleep treatment-focused medical device company’s shares could be market-beaters over the next decade. This is due to its industry-leading products and massive market opportunity. Management estimates that there are 1 billion people impacted by sleep apnoea worldwide. But with only ~20% of these sufferers being diagnosed, it should have a long runway for growth. 

More reading

• Why AP Eagers, Lendlease, Pushpay, & ResMed shares are sinking lower
• 3 ASX 200 healthcare shares I’d buy today
• How you can get very rich with ASX 200 shares
• 2 millionaire-maker ASX internet growth shares
• Where to invest $500 in ASX shares right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended ResMed Inc. 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.

The post $2,500 invested in these 3 ASX shares could make you a fortune in 10 years appeared first on Motley Fool Australia.

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The Bubs Australia Ltd (ASX: BUB) share price has outperformed the A2 Milk Company Ltd (ASX: A2M) in May by soaring more than 20%. 

Much of Bubs recent share price success can be attributed to its announcement of a new major supply agreement with Coles Group Ltd (ASX: COL) and other domestic retailers. This agreement means Bubs Organic Grass Fed Infant Formula will be on the shelves of more than 480 Coles supermarkets from June 2020, complementing existing products in its Goat Milk Infant formula and Organic Toddler snacks. Other retailers to join Coles in selling Bubs products in-store include Baby Bunting Group Ltd (ASX: BBN) and Woolworths Group Ltd (ASX: WOW). 

Bubs have also expanded their product range to include an organic cow milk formula which will see them cater to a market larger than goat’s milk by moving into the cow’s milk segment which accounts for over 90% of the Australian formula market. 

Bubs half-year result 

The Bubs share price showed it wasn’t impressed with the company’s half-year results released in February. The results may have missed expectations, or the timing of the report may have coincided with the initial outbreak of the coronavirus epidemic and consequent market sell-off. 

The company outlined a 39% increase in net revenue and a significant 24% increase in its gross margins. Its EBITDA loss slightly worsened due to a 269% increase in marketing and promotional costs to support its domestic presence and building brand awareness in China. This is reminiscent of A2 Milk’s significant increase and investment in marketing in its FY19 full-year report. In its 1H20 report, it commented that the increased levels of investment in marketing and capability development translated into accelerated growth in its China label business. 

A strong driver of its growth has been the sales of Bubs’ Goat Infant Formula which grew 77% on the prior corresponding period. Other revenue streams showed moderate growth with its Organic Baby Food growing 23% and Adult Goat Milk Powder increasing 30%. Its fresh milk and yoghurt products looked to struggle the most, falling 49%. 

Foolish takeaway 

Bubs are securing the right partnerships and making worthwhile investments to strengthen its brand, however, while it is making all the right moves, given the fact that it is not yet a cash-generating business I wouldn’t consider it a ‘safe’ investment. All things considered, though, down the track Bubs could prove a worthy buy for the medium to long term. 

More reading

• 2 ASX shares in the firing line of trade tensions with China
• 3 stellar ASX growth shares to buy right now
• 3 ASX shares that will have strong dividends in 2020
• 3 ASX 200 blue chip shares I would buy today
• 2 ASX 50 shares for retirees to buy right now

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of A2 Milk, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST FPO. 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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