Over the last three decades the Australian share market has provided investors with an average return of approximately 9.5% per annum.

This means that if you’re going to beat the market over the next decade, you’ll need to aim high and target returns of at least 10% per annum.

But which shares could be capable of beating the market in the 2020s? I think the two listed below could be market beaters:

a2 Milk Company Ltd (ASX: A2M)

I believe that a2 Milk Company could be a market beater over the next decade. This is due to its expanding fresh milk footprint and the growing demand for its infant formula in the China market. This strong demand was evident in the first half when a2 Milk Company’s China label infant nutrition sales doubled to NZ$146.7 million.

While this is a sizeable figure, the company only has a very modest market share. And due to its strong brand and increasing distribution network in the country, I expect the company to capture a greater slice of the market throughout the 2020s and drive further strong earnings growth.

SEEK Limited (ASX: SEK)

Another ASX share which I think could be a market beater in the 2020s is SEEK. While 2020 has been a difficult year for the job listings giant because of the pandemic, I believe its long term outlook is as positive as ever. This is due to its leadership position in the ANZ market and its rapidly growing China-based Zhaopin business.

It is the latter business which I expect to be the key driver of growth over the next decade. In the first half of FY 2020 it contributed 47.8% of SEEK’s total revenue. This is almost double the revenue contributed by the ANZ business. Given the size of the China market and its opportunities in other key Asian markets, I believe the company is well-placed to hit its revenue target of $5 billion later this decade. This compares to revenue of $1,537.3 million in FY 2019.

More reading

• Is the SEEK share price a buy right now?
• 3 five-star ASX shares I would buy today
• ASX shares I’d buy if this decline is a second COVID-19 crash
• S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100
• 3 of the best ASX 200 blue chip shares to buy today

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended SEEK Limited. 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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ASX shares can be a great way to grow your wealth over the long-term.

Investing in quality businesses for the long-term can produce great results if you pick correctly.

No ASX share is guaranteed to generate strong capital growth, but I think these ideas could be some of the ones to potentially beat the market over the next decade:

Share 1: Altium Limited (ASX: ALU)

Altium is a leading electronic PCB software business. It is already one of the biggest players in the market and it’s aiming for clear market dominance by the middle of this decade. Altium’s management are aiming for 100,000 Altium Designer subscribers by 2025, which should help reach the revenue goal of US$500 million.

The ASX share wants to keep growing its earnings before interest, tax, depreciation and amortisation (EBITDA) margin as economies of scale benefit the business. Software businesses have an advantage because their software can be easily replicated and distributed for little cost. In the FY20 half-year result Altium reported an EBTIDA margin of 39.7%, up from 38.8%.

I believe Altium is a great business for a number of reasons. I’ve already mentioned the growing profit margins. It’s debt free with a growing cash balance. Altium has been paying a growing dividend. I also like that Altium is growing revenue in multiple regions.

The world is becoming increasingly technological, so Altium’s service will be even more important to its clients. The ASX share’s current client list includes Tesla, Space X, NASA, Google, Siemens, Microsoft, NEC, Belkin, HP, Amazon, Fitbit, Disney and Qualcomm.

Share 2: Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an ASX share which specialises in facilitating electronic donations to not-for-profits. It’s getting a lot of success from the large and medium US church sectors with their large congregations.

Over the long-term the ASX share is targeting US$1 billion revenue, which represents 50% of the medium and large US church segments. In FY20 the company made US$129.8 million of operating revenue. There is a lot of potential growth left. 

I think the Church Community Builder acquisition was a wise one. The two businesses launched a joint product offering in April 2020. Pushpay wants to be able to offer the best-in-class church management system and the best community app.

In FY20 the company generated US$25.1 million of earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF). In FY21 management has guided EBITDAF will be between US$48 million to US$52 million. That would be a strong year of growth!

One of the most attractive things to me about Pushpay is about how scalable it is. In FY20 it increased its gross margin by five percentage points from 60% to 65%. I expect the gross margin can keep going up as the ASX share heads towards US$1 billion of revenue.

Share 3: Xero Limited (ASX: XRO)

Xero is another ASX share with excellent growth potential. It’s a cloud accounting software business which provides its service in several countries including Australia, New Zealand, the UK and the US.

Xero’s gross profit margin is very attractive. It increased from 83.6% in FY19 to 85.2% in FY20. Every new subscriber means a lot of the revenue also turns into more gross profit. 

The tech ASX share is still heavily investing for growth, yet the 30% increase in operating revenue in FY20 resulted in a 52% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$139.2 million.

Xero also finally achieved a profit in FY20. Its net profit was NZ$3.3 million and free cashflow increased by 320% to NZ$27.1 million.

The software business continues to grow its subscriber numbers. I think it can add many more over the next decade. In FY20 alone it added 467,000 net subscribers. Each new subscriber is another business paying attractive monthly revenue to Xero.

I think more business owners will choose Xero’s service this decade for the time-saving tools and automation.

Foolish takeaway

In my opinion, all three of these ASX shares are some of the best on the ASX. At the current prices I’d probably go for Pushpay because it has a longer growth runway and its profit margins are rising the fastest. Altium and Xero are great businesses, but I’d prefer to buy them both for around 10% cheaper than what they’re trading at today.

More reading

• Coles shares and 2 other ASX 200 companies to buy in the current market
• Why Nearmap and this ASX mid cap share could be strong buys
• Is the Altium share price the steal of the century?
• $3,000 invested in these 2 shares could make you a fortune over the next 10 years
• The most explosive ASX tech shares you can buy today

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium, PUSHPAY FPO NZX, and Xero. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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There certainly are a lot of quality options for investors on the S&P/ASX 200 Index (ASX: XJO).

While not all shares on the benchmark index are in the buy zone, three which I think are great value are listed below.

Here’s why I would buy them today:

BHP Group Ltd (ASX: BHP)

The first ASX 200 share I would consider buying is BHP. The Big Australian is my favourite option in the resources sector due to its diverse, low cost, and world class operations. Another reason I like the company at the moment is due to favourable commodity prices. This is particularly the case with iron ore, which is trading beyond US$100 a tonne. And with many analysts expecting the steel making ingredient to trade at lofty levels for longer due to supply disruptions and robust demand, BHP looks well-placed to deliver strong results in both FY 2020 and FY 2021. As a result, I think the risk/reward on offer with its shares currently is compelling.

Ramsay Health Care Limited (ASX: RHC)

Ramsay Health Care is another ASX 200 share to look at. While the private hospital operator is facing very tough trading conditions, and this is unexpected to change in the near term, the market already understands this and has priced it into its shares. As a result, I think investors should be focusing on its long term prospects, which look very positive. This is due to ageing populations and increasing chronic disease burden which are expected to drive strong demand for healthcare services over the next decade and beyond.

REA Group Limited (ASX: REA)

Another ASX 200 share I would suggest investors consider buying is REA Group. It is a leading property listings company with real estate websites in Europe, Asia, the United States, and Australia. The pandemic has made trading conditions tough for the housing market, but with restrictions now easing there are signs of life again. In fact, last weekend auction clearance rates were very strong, all things considered. I expect trading conditions to improve over the next 12 months and for REA Group’s earnings growth to accelerate once the headwinds it is facing dissipate.

More reading

• Leading brokers name 3 ASX 200 shares to sell today
• ASX 200 jumps 3%: CBA rebounds, Afterpay hits a new record high
• Investing $1,000 into these ASX 200 shares could be a smart move
• Coles shares and 2 other ASX 200 companies to buy in the current market
• The Santos share price is down 36%! This is what I’d do today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited and REA Group Limited. 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 3 fantastic ASX 200 shares to buy right now appeared first on Motley Fool Australia.

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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX 200 shares:

G8 Education Ltd (ASX: GEM)

According to a note out of the Macquarie equities desk, its analysts have retained their underperform rating but lifted the price target on this childcare centre operator’s shares to 80 cents. Macquarie believes that demand for childcare will be volatile in the near term and expects this to weigh on its performance. Especially given the oversupply of centres across the country. The G8 Education share price is trading at 94.3 cents on Tuesday afternoon.

South32 Ltd (ASX: S32)

Another note out of the Macquarie equities desk reveals that its analysts have downgraded this mining giant’s shares to an underperform rating with a $1.90 price target. The broker made the move due to concerns over the weak prices of some of the commodities it produces. It feels this could lead to South32 falling short of expectations in the near term. Especially with the Australian dollar strengthening and becoming a headwind. The South32 share price is changing hands for $2.05 today.

Star Entertainment Group Ltd (ASX: SGR)

Analysts at Morgan Stanley have downgraded this casino and resort operator’s shares to an underweight rating with an improved price target of $3.30. According to the note, the broker believes that Star’s Sydney business will be negatively impacted by the opening of the new Crown Resorts Ltd (ASX: CWN) resort in the city at the end of the year. It feels this potential disruption has not been priced into its shares currently. The Star share price is trading just below its price target at $3.24 this afternoon.

More reading

• 3 fantastic ASX 200 shares to buy right now
• ASX 200 jumps 3%: CBA rebounds, Afterpay hits a new record high
• Investing $1,000 into these ASX 200 shares could be a smart move
• Coles shares and 2 other ASX 200 companies to buy in the current market
• The Santos share price is down 36%! This is what I’d do today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. 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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The Zip Co Ltd (ASX: Z1P) share price is up another 10.75% today (at the time of writing) and is sitting at $6.39 a share. That makes it a 5-bagger ASX share (up ~500%) in just 3 months – and a double-up in just the past month alone. That’s right, Zip shares were trading for $1.05 a share back in mid-March, making this buy now, pay later company one of the best ASX shares to have taken a punt on in the depths of the share market crash.

So what’s going on here? And more importantly, are Zip Co shares still a buy today?

Why the Zip Co share price has hit the roof

Along with its BNPL arch-rival Afterpay Ltd (ASX: APT), Zip has benefited form a massive shift in investor sentiment since the panic that March brought. As the extent of the coronavirus lockdowns became clear, investors hit the panic button on BNPL shares.

It was feared that a lockdown-induced credit crunch and massive job losses would lead to a wave of defaults from BNPL users. Despite what the companies might say, Zip and Afterpay can be considered credit providers (in my view). That’s because they extend lines of credit to their users which can be defaulted on.

During the March sell-off, Zip (along with Afterpay) seemed to be treated like an ultra-risky bank share. That saw Zip shares fall more than 70% from ~$4.48 in February to $1.05 by mid-March. Afterpay shares also cratered, falling nearly 80% from around $40 in February to under $9 in March.

But since then, the sentiment has seismically shifted. After investors realised that (partly thanks to government assistance) Zip’s customers were not all about to default on their debts, the Zip share price rebounded in dramatic fashion. Between 19 March and 26 March, Zip shares were up more than 30%.

And then investors realised that the coronavirus pandemic might actually be helping payments companies like Zip Co. Cash as a payment method was already declining in popularity pre-COVID. But with cash usage presenting some hygiene issues during the lockdowns, customers turned to cashless solutions like Zip more than ever.

In fact, last month Zip reported that its revenue was up an astonishing 81% in April 2020. It also reported customer numbers were up 66%.

Is it too late to buy?

I don’t find a lot to like at the current Zip Co share price. Despite Zip being a great growth story, I think there might be a little bit of euphoria going for this company.

I do think  Zip Co deserves a ‘high growth’ share price. But I don’t consider investing in a company after a 500% gain in 3 months a great idea. BNPL payments shares like Afterpay and Zip are highly volatile, and so I think a better strategy is to wait for a dip to pick some shares up, rather than chasing the gains of the past 2 months at today’s prices.

More reading

• Why Afterpay, Super Retail, Uniti, & Viva Energy are charging higher
• ASX 200 jumps 3%: CBA rebounds, Afterpay hits a new record high
• Afterpay and Zip shares are rocketing higher today: Can they go even higher?
• Is the Altium share price the steal of the century?
• The top ASX growth shares I would buy for the 2020s

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T 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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