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There certainly are a large number of growth shares for investors to choose from on the ASX.

Three which I think are among the best the local market has on offer are named below. Here’s why I would buy them:

Bravura Solutions Ltd (ASX: BVS)

The first ASX growth share to consider buying is Bravura Solutions. It is the financial technology company behind the Sonata wealth management platform. This increasingly popular wealth management platform allows financial advisers to connect and engage with clients via computers, tablets, or smartphones. In addition to this, the company has been on an acquisition spree over the last couple of years and now has a collection of software solutions with large addressable markets. Combined, I believe Bravura is well-placed for growth once the pandemic passes.

NEXTDC Ltd (ASX: NXT)

Another ASX growth share to consider is this leading data centre-as-a-service provider. I’ve been very impressed with the way the company has been performing over the last few years. For example, NEXTDC’s customer numbers have grown at a compound annual growth rate (CAGR) of 21% over the last four years. Pleasingly, not only are its customer numbers rising, but the number of services they are using has also been rising. This has led to its interconnections increasing at a CAGR of 31% over the same period. Management notes that this has been driven by the increasing use of hybrid cloud and connectivity inside and outside its data centres due to customers expanding their ecosystems. The good news is that the seismic shift to the cloud is continuing to accelerate. I believe this leaves NEXTDC well-positioned to deliver strong earnings growth over the next decade. 

Xero Limited (ASX: XRO)

A final ASX growth share to consider buying is Xero. I think this cloud-based business and accounting software provider has the potential to grow its earnings at a very strong rate over the coming years thanks to the quality and stickiness of its platform. And while the company has almost 2.5 million subscribers using its platform, this is still only a fraction of its overall market opportunity. Management notes that less than 20% of its global English-speaking target market is using cloud-based accounting software currently. This compares to 50% in the ANZ market. Given the overwhelming benefits of this type of software, I expect more to shift to the cloud in the coming years.

More reading

• 5 things to watch on the ASX 200 next week
• Why this fundie still sees an ASX tech share surge
• 2 must buy ASX 200 shares to snap up right now
• The NEXTDC (ASX:NXT) share price just hit a record high: Can it go higher?
• Why I would buy Altium (ASX:ALU) and these ASX growth shares

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Computershare Limited (ASX: CPU)

According to a note out of Citi, its analysts have retained their sell rating and $12.00 price target on this stock transfer company’s shares. Citi believes that FY 2021 will be a tough year for the company due to the numerous headwinds it is facing. And while it does expect these headwinds to ease eventually, it fears it could be FY 2022 until there is an improvement in its performance. The Computershare share price ended the week at $12.29.

New Hope Corporation Limited (ASX: NHC)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating and cut the price target on this coal miner’s shares to 90 cents. Macquarie notes that New Hope delivered a weaker than expected FY 2020 result last week. Unfortunately, the broker doesn’t expect an improvement any time soon due to reducing production at New Acland and weak thermal coal prices. The New Hope share price last traded at $1.28.

Webjet Limited (ASX: WEB)

Analysts at Morgan Stanley have retained their underweight rating and cut the price target on this online travel agent’s shares to $3.00. According to the note, Morgan Stanley is expecting another sizeable loss from Webjet in FY 2021 due to its exposure to the struggling leisure air travel market. And although it expects the company to return to profit in FY 2022, it doesn’t see value in its shares at the current level. The Webjet share price was fetching $3.66 at Friday’s close.

More reading

• Is the Soul Patts (ASX:SOL) share price a buy?
• Top brokers name 3 ASX shares to sell today
• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Why Kathmandu, New Hope, Recce, & Ramelius shares are dropping lower today
• ASX 200 falls 0.7%, UK and travel shares drop

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. 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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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Citi, its analysts have retained their buy rating and lifted the price target on this gaming technology company’s shares to $34.60. The broker notes that its U.S. land-based business is recovering quicker than expected with the vast majority of its machines now in operation. In addition to this, it believes that new machine sales will start to pick in the near term and has upgraded its estimates accordingly. I agree with Citi on Aristocrat Leisure and would be a buyer of its shares.

Pushpay Holdings Ltd (ASX: PPH)

Analysts at Credit Suisse have retained their outperform rating and lifted their price target on this donation platform provider’s shares to NZ$9.30 (A$8.63). According to the note, Credit Suisse believes Pushpay is providing churches with an indispensable service and expects it to benefit greatly from an acceleration in digital donations because of the pandemic. In light of this, the broker suspects the company will outperform its guidance once again in FY 2021. I agree with Credit Suisse and believe Pushpay would be a fantastic long term option for investors.

Westpac Banking Corp (ASX: WBC)

A note out of Goldman Sachs reveals that its analysts have reiterated their buy rating but trimmed their price target on this banking giant’s shares slightly to $19.80. Although Westpac’s $1.3 billion settlement was higher than the broker expected, it believes the lifting of this dark cloud could be a big positive for its shares. Goldman notes that Westpac’s shares are trading at a significant discount to its peers and feels this could narrow now the bad news is out of the way. I would have to agree with Goldman Sachs on this one as well. I think Westpac could be a good option if you don’t already have exposure to the banks.

More reading

• How to be the next Warren Buffett with ASX shares
• $3,000 invested in these 3 ASX shares could make you a fortune over the next 10 years
• ASX 200 finishes the week with a bang
• Are ASX bank shares a buy after lending rules eased?
• Will the Reserve Bank cut the cash rate again in October?

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. 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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I think investing in exchange-traded funds (ETFs) could be a very good choice with $10,000.

But there are lots of different ETFs. Some are focused on one particular country like Vanguard Australian Shares Index ETF (ASX: VAS). Others are focused on a particular industry like Betashares Global Cybersecurity Etf (ASX: HACK).

If I had $10,000 to invest into ETFs then these are the ones I’d pick:

Betashares Global Quality Leaders ETF (ASX: QLTY) – $5,000

I think this could be one of the best ETFs to own. Some broadly diversified ETFs don’t produce strong returns. And country-specific ones are obviously limited to one country.

This idea gives exposure to quality businesses listed across the world. It’s invested in 150 great businesses outside of Australia. To make it into the ETF’s holdings, a business needs to rank well on: return on equity (ROE), debt to capital, cash flow generation ability and earnings stability.

If a business ranks well on those metrics then it gives it a great chance of producing good shareholder returns. The biggest holdings in the ETF are: Nike, Keyence, Nvidia, Novo Nordisk, Intel, Texas Instruments, Adobe, Intuit, UnitedHealth and Johnson & Johnson.

Around a third of the shares are outside of the US and more than half of the sector allocations are to IT and healthcare. I like those two sectors because they offer secular growth.

The ETF has annual management fees of 0.35% and since inception in November 2018 it has produced net returns of 19.6% per annum.

Betashares Ftse 100 ETF (ASX: F100) – $3,000

The UK share market has been unloved in recent years because of Brexit and now COVID-19. Indeed, over the past year the net return has actually been a decline of 14.4%.

But there are plenty of good, global businesses on the London Stock Exchange that are worth getting exposure to in my opinion. Investments include: Astrazeneca, Glaxosmithkline, British American Tobacco, Diageo, HSBC, Unilever, Rio Tino, Reckitt Benckiser, BP, Royal Dutch Shell, BHP, National Grid, Vodafone, London Stock Exchange, BAE Systems, Scottish Mortgage Investment Trust and Ocado.

I think these are high-quality names and will be able to do well over the long-term.

The ETF has an annual management fee of 0.45% per annum and it’s trading with a price/earnings ratio of just 15.

I believe getting exposure to just different companies and currencies is a good idea.

Vanguard FTSE Asia Ex-Japan Shares Index ETF (ASX: VAE) – $2,000

Asia has been one of the best regions in getting COVID-19 under control which has helped get their economies mostly back to normal.

Over the long-term I think Asia could be a region that delivers good economic growth, which should be helpful for the underlying businesses.

The ETF has over 1,350 holdings from across the region, excluding Japan. Its biggest holdings are: Alibaba, Tencent, Taiwan Semiconductor Manufacturing, Samsung, AIA, Meituan Dianping, Reliance Industries, JD.com, China Construction Bank and Ping An Insurance.

It has an annual management fee of 0.40% per annum. The ETF has delivered annual returns per annum of 9.7% since inception in December 2015 which has included issues like the trade war as well as COVID-19.

Aside from the Asia exposure, one of the main reasons to like this ETF so much is its investment metrics. According to Vanguard, it has a price/earnings ratio of around 17, an earnings growth rate of 12.7% and a return on equity ratio of 15.3%. These are solid numbers for an entire ETF. Earnings growth and return on equity is a good indicator of future returns. COVID-19 has harmed earnings in the short-term, but it could bounce back. 

Foolish takeaway

I like each of these investment ideas and I think they offer good diversification. They offer something quite different to a typical Australian or American based ETF. I think the BetaShares global quality one is best, but I like the look of UK shares and Asia right now too.

More reading

• Why I just bought shares of this ASX ETF
• COVID-19 fear hits the UK, 2 ASX shares to buy
• Where I’d invest $500 into ASX shares
• Here’s how I would spend $10,000 on ASX shares right now
• 3 top ASX shares I would love to buy this September

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. 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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If you’re looking for a way to beat low interest rates, then the ASX dividend shares listed below could be worth considering.

I believe both dividend shares could be great options for income investors due to their generous yields and strong businesses. Here’s why I would buy them:

BHP Group Ltd (ASX: BHP)

If you don’t have exposure to the resources sector, then you might want to get it with an investment in BHP. I think BHP is the best option in the sector due to its diverse, world class, and low cost operations. The mining giant also has a number of growth opportunities, particularly in oil, that I believe could create value for shareholders in the coming years.

In the meantime, BHP looks well-positioned to deliver very strong free cash flows again in FY 2021 thanks to favourable iron ore and copper prices. The good news is that given the strength of its balance sheet, I expect the majority of its cash flow to be returned to shareholders. Based on the latest BHP share price, I estimate that it offers investors a fully franked forward ~4.5% yield.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share to consider buying is this beaten down telco giant. While the sizeable decline in the Telstra share price this year is disappointing for shareholders, I think it is a buying opportunity for non-shareholders. Especially if the company shifts its dividend policy to a free cash flow-based one and maintains its dividend. 

In addition to this, after several years of profit declines, I believe a return to growth is on the horizon in the next couple of years. This is due to its T22 strategy, the easing NBN headwinds, and 5G internet. I expect the latter to be a big boost to mobile revenues once there is an iPhone that supports it. At present I still expect the company to pay a 16 cents per share dividend in FY 2021. Based on this and the current Telstra share price, it offers investors a fully franked 5.6% dividend yield.

More reading

• 2 unloved ASX 200 shares I would buy now
• 2 ASX dividend shares with yields over 8%
• 2 ASX shares I would recommend to a beginner investor
• Why the Telstra (ASX:TLS) share price could be under pressure in 2021
• Where to invest your Telstra (ASX:TLS) dividends

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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A very strong finish on Friday led to the S&P/ASX 200 Index (ASX: XJO) charging notably higher last week. The benchmark index climbed 1.7% over the period to end it at 5,964.9 points.

Another busy five days is expected next week. To keep you informed, I have picked out five things to watch:

ASX futures pointing higher.

The latest SPI futures are pointing to the ASX 200 opening the week 21 points higher on Monday. This follows a very positive end to the week on Wall Street. On Friday night the Dow Jones rose 1.3%, the S&P 500 climbed 1.6%, and the Nasdaq stormed a sizeable 2.25% higher. The latter could be good news for tech shares such as Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO).

Annual general meeting season kicks off.

This week is the start of annual general meeting (AGM) season. As most companies traditionally provide trading updates at these meetings, investors should soon be able to gain an insight into how different sides of the economy are performing during the pandemic. Holding an AGM next will be stock exchange operator ASX Ltd (ASX: ASX) on Wednesday.

Mesoblast remestemcel-L FDA decision.

The Mesoblast limited (ASX: MSB) share price will be on watch next week. Last month the Oncologic Drugs Advisory Committee of the United States Food and Drug Administration (FDA) voted that the available data supports the efficacy of its remestemcel-L (RYONCIL) product in paediatric patients with steroid-refractory acute graft versus host disease. A final decision will be made by the FDA in the United States on Wednesday evening (Australia time). If approved, Mesoblast plans to launch RYONCIL in the United States in 2020.

Shares going ex-dividend.

A number of shares are due to go ex-dividend next week and could trade lower. This includes mining services company NRW Holdings Limited (ASX: NWH) on Monday, property company Cromwell Property Group (ASX: CMW) on Tuesday, and Perenti Global Ltd (ASX: PRN) on Friday.

Billions of dollars of dividends on the way.

It is going to be a bumper week of dividend payments for Australian investors. A large number of companies are due to pay their dividends over the next five days. This includes dividend favourites such as banking giants Australia and New Zealand Banking GrpLtd (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) on Wednesday. Elsewhere, supermarket operator Coles Group Ltd (ASX: COL) is paying its dividend on Tuesday and iron ore producer Fortescue Metals Group Limited (ASX: FMG) is rewarding its shareholders on Friday.

More reading

• 3 five-star ASX 200 shares to buy in October
• Looking for ASX dividend shares to buy? Try these
• How to turn $20,000 into over $200,000 in 10 years with ASX shares
• When to save cash and when to invest in ASX shares
• ASX 200 finishes the week with a bang

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO and COLESGROUP DEF SET. 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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While some shares have smashed the market in 2020, not all of them have fared so well.

Two ASX shares that have significantly underperformed the market this year are listed below.

Here’s why I would think these unloved shares could now be in the buy zone:

Lendlease Group (ASX: LLC)

The Lendlease share price is down a disappointing 42% from its 52-week high. I think this has left the international property and infrastructure company’s shares trading at a very attractive level for investors. Especially now the worst is arguably behind the company following the divestment of its engineering business.

Another big positive is Lendlease’s recent strategy announcement. As I mentioned here last week, this strategy is shifting both its earnings mix and business model towards that of industrial property giant Goodman Group (ASX: GMG). Given the exceptional success of Goodman over the last decade, this can only be a good thing. Furthermore, it could support a re-rating of its shares in the near future if its earnings growth becomes more consistent. This could make it a great option for patient investors.

Telstra Corporation Ltd (ASX: TLS)

Another ASX share which has fallen out of favour this year is this telco giant. The Telstra share price is down 27% from its 52-week high and hovering just above its 52-week low. This decline has been driven by concerns that another dividend cut is coming in FY 2021 after its guidance fell short of expectations due to the pandemic. However, I’m optimistic that a dividend cut can be avoided if Telstra shifts its dividend policy to a free cash flow-based one.

In light of this, I think investors should focus more on the long term, which is becoming increasingly positive. This is thanks to rational competition in the industry, its cost cutting, the easing NBN headwind, and the arrival of 5G. Combined, I believe a return to growth might not be far away, which could make Telstra an unloved share to buy.

More reading

• 2 ASX dividend shares with yields over 8%
• Why the Telstra (ASX:TLS) share price could be under pressure in 2021
• Where to invest your Telstra (ASX:TLS) dividends
• Is Lendlease (ASX:LLC) the new Goodman Group (ASX:GMG)?
• Forget term deposits and buy Coles (ASX:COL) and this ASX dividend share

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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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It’s a choice that’s plagued generations of homeowners – pay off the mortgage faster or use the extra cash to invest in ASX shares? It’s a devilishly vexing choice, as there are good reasons to go down either path. But I think the current investing environment we are navigating through in 2020 has tilted the playing field in one firm direction. Let’s dive in.

Mortgage…

So, the family home is the largest asset of many Aussie families. And it’s normally a great asset to own. Paying a mortgage instead of paying rent builds your long-term equity. And a paid-off house lends security, certainty and the ‘my-home-is-my-castle’ effect. No one can evict you, ask you to move or tell you to mow your lawn.

But mortgage interest is not normally tax-deductible in Australia (at least on the family home). That means that by making extra payments on your mortgage above the minimum instalments, you are effectively getting a return on your investment of whatever your mortgage interest rate is. If you have a 2.5% mortgage (increasingly common in our era of record low interest rates), then you are effectively getting a 2.5% per annum return on extra repayments. That looks pretty decent against what you can get from a term deposit or a savings account right now.

However, it doesn’t look as good when you consider the alternative. See, investing in anything is an exercise in opportunity cost. When you invest $1,000 in option A, you give up the opportunity to invest that $1,000 in option B.

Or ASX shares

Let’s take a simple ASX share investment as an alternative. The Vanguard Australian Shares Index ETF (ASX: VAS) is an index exchange-traded fund (ETF) that holds a basket of shares representing the largest 300 Australian public companies. It most of the Aussie companies you’d know, from Commonwealth Bank of Australia (ASX: CBA) to Woolworths Group Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS) and even Afterpay Ltd (ASX: APT).

It’s one of the easiest shares you can own because it simply tracks the Australian share market over time and automatically adjusts itself so it always holds large shares in the largest ASX companies.

Since its inception in 2009, this VAS ETF has returned an average of 8.4% per annum. That means that if you instead invested those extra mortgage repayments into VAS instead, you’d be getting an effective return of 8.4% per year, instead of 2.5%. Of course, that assumes VAS continues to average at 8.4%, which isn’t guaranteed.

That difference can be worth a lot. According to MoneySmart’s compound interest calculator, if you invest $10,000 and get a 2.5% return over 20 years, you’ll end up with $16,479 at the end. But if instead you manage an 8.4% return, you’ll instead have $53,342 for your efforts.

Foolish takeaway

Of course, these numbers are all hypothetical. But the logic behind them is sound, in my view. I think you’re almost always better off investing any surplus cash you might have into ASX shares rather than your mortgage. But if having a paid-off roof over your head as soon as possible is important to you, then there’s nothing wrong with just focusing on your home as well. There’s a lot of value in a good night’s sleep! Have the thought and discussion though, it’s a worthwhile conversation to hold, at the least.

More reading

• Buy Fortescue and this ASX dividend share for a source of income
• The 3 best ETFs for passive investing
• How to make $1 million from ASX shares
• Is a passive ASX investing strategy for you?
• 3 simple ways to save more cash to buy ASX shares today!

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths 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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One of the most successful investors in the modern era is the Oracle of Omaha, Warren Buffett.

Over the last few decades the legendary investor’s Berkshire Hathaway business has consistently generated market-beating returns for shareholders.

For example, at the end of last year, Berkshire Hathaway had recorded an annual average return of 20.5% since it began trading in 1965.

This means that even if you had just invested a modest $1,000 into the company in 1965, you would be sitting on a vast fortune today.

Based on a return of 20.5% per annum, that $1,000 investment would have grown to be worth a mammoth $23.6 million at the end of 2019.

How is this possible?

Mr Buffett hasn’t achieved this by taking moonshots on speculative companies like BrainChip Holdings Ltd (ASX: BRN) or Novonix Ltd (ASX: NVX). He has achieved it by using a relatively simple investment strategy – buy and hold investing.

The Berkshire Hathaway boss looks to buy shares in companies with strong business models, competitive advantages, talented management teams, and positive long-term outlooks.

He then holds onto them for a long period of time (unless the investment thesis breaks) and lets the power of compounding do the rest.

How can you replicate his success?

There’s nothing to stop readers from following in Warren Buffett’s footsteps and investing this way. All you need to do is look for those quality companies that you can invest in with a long term view.

The good news is that there are a good number of companies on the All Ordinaries Index (ASX: XAO) which I believe have the potential to generate strong returns for investors over the next decade and beyond.

For example, electronic design software company Altium Limited (ASX: ALU) looks well-positioned for growth. This is thanks to its exposure to the rapidly growing internet of things and artificial intelligence markets.

Another company that could grow strongly over the next decade and beyond is Cochlear Limited (ASX: COH). Ageing populations look set to drive increasing demand for its implantable hearing devices over the 2020s.

Finally, Pushpay Holdings Ltd (ASX: PPH) is a donation management and community engagement platform. It stands to benefit greatly from the shift to a cashless society and the digitisation of churches. As a result, I think it could be a long term market beater.

More reading

• $3,000 invested in these 3 ASX shares could make you a fortune over the next 10 years
• 3 five-star ASX 200 shares to buy in October
• Why Atlas Arteria, Cochlear, Telix, & Treasury Wine shares are dropping lower
• The Aussie dollar at a critical juncture and could turn fortunes for these ASX stocks
• Should you buy Appen (ASX:APX) and Pushpay (ASX:PPH) shares after the tech selloff?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and PUSHPAY FPO NZX. The Motley Fool Australia has recommended Cochlear Ltd. and 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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I think that ASX shares can do a great job of growing your wealth. I’m not expecting to be able to turn $3,000 into $3 million. However, I think the three ideas in this article could deliver much stronger returns than the market over the next decade.

To deliver big returns I think you need to find businesses that are at least reasonably small (and have room to go), have international growth aspirations (for a large addressable market) and are priced at a reasonable valuation today.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of my highest-conviction ASX share ideas right now. It’s an electronic donation business which helps clients like large and medium US churches to receive money digitally.

FY20 was really strong. Total processing volume rose 39% to US$5 billion and total revenue increased by 32% to US$129.8 million. It was the year that the ASX share proved it has passed an important stage where its profits are now clearly positive and rising quickly.

The ASX share’s earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) improved by US$23.5 million to US$25.1 million. Operating cash flow improved by US$26.3 million to US$23.5 million – there was negative cashflow of US$2.8 million last year.

The Pushpay business is really scalable. In FY20 alone it grew its gross profit margin from 60% to 65%, it also increased its EBITDAF margin from 17% to 22%. That increase in profitability was just from a US$31.4 million increase in revenue. Over the long-term the ASX share is aiming for US$1 billion of revenue.

In FY21 alone Pushpay is looking to at least double its EBITDAF to US$50 million. At the current Pushpay share price it’s trading at 38x FY21’s estimated earnings.

Bubs Australia Ltd (ASX: BUB)

Bubs is a promising infant formula business, which specialises in goat milk products. FY20 was a strong year with full year revenue increasing by 32% to $62 million. Most importantly, Bubs infant formula sales rose by 58% to $30 million. Infant formula sales represented 55% of group revenue.

It’s this growth of infant formula which is the most important aspect for future growth. It’s the segment that could deliver the most growth over the coming years and it has a high gross margin of 40%. To put that in context, Bubs’ normalised gross margin improved from 21% to 24%. The higher percentage of sales that infant formula is, the more profitable that Bubs will be.

The ASX share has done well in Australia, it’s now sold across a large amount of retail stores including Coles Group Limited (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Baby Bunting Group Ltd (ASX: BBN).

But it’s the international growth that excites me most. Direct sales to China increased 32% to $13 million and export markets outside of China delivered a five fold increase in sales. If international sales can keep growing strongly over the long-term then Bubs could become a much larger business.

With a share price under $0.80 and a market capitalisation under $500 million, I think the Bubs share price represents good value.

Redbubble Ltd (ASX: RBL)

In FY20 the artist-produced product store company saw marketplace revenue grow my 36% with gross profit going up 42% and operating earnings before interest, tax, depreciation and amortisation (EBITDA) rising by 141%.

The ASX share is now free cashflow positive and it ended with a closing cash balance of $58 million.

The decision to start selling masks was a clever one. It really helped the fourth quarter where marketplace revenue grew 73%, and gross profit grew by 88%.

In the first month of FY21 the ASX share’s marketplace revenue grew by 132% with similar sale levels in the first two weeks of August.

I think Redbubble is on track to deliver a strong FY21 result and may benefit from improving economies of scale over the coming years. It has a network of 37 fulfillers across 10 countries and 41 locations. Redbubble is steadily expanding its product lines, which should hopefully diversify and improve earnings.

Redbubble is an attractive way to diversify away from Australian retail sales, as less than 6% of its sales are in Australia.

The Redbubble share price still looks good value to me considering it generated $38 million of free cashflow in FY20 and and the likely future growth.

In the long-term the company is targeting revenue of $1 billion, compared to FY20’s marketplace revenue of $349 million. There is plenty of room for growth, with a much higher profit margin.

More reading

• How to be the next Warren Buffett with ASX shares
• Should you buy Appen (ASX:APX) and Pushpay (ASX:PPH) shares after the tech selloff?
• The Bubs (ASX:BUB) share price is down 42% in 12 months: Is it a buy?
• 3 top ASX tech shares to buy in 2020
• New to investing? I would invest $500 into these exciting ASX shares

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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