I think the 2 ASX shares mentioned in this post have long-term growth potential and could make big returns, given time.
Not every investment is going to have the potential to generate good capital growth over time. Some of them may simply be poor investments, whilst others may be focused on high dividends and low growth.
But I think these two could be good long term buys:
iShares S&P 500 ETF (ASX: IVV)
This is exchange traded fund (ETF) tracks the S&P 500, which is an index which has been around for many decades.
It is invested in 500 American-listed businesses, many of them are the best and most profitable in the world. You get great diversification if you own a portfolio of 500 shares.
The USA is a good place for businesses to operate – the country is one of the most capitalist places in the world, it generally favours big companies in the biggest global economy.
Strong, high-performing companies should lead to good investment returns. iShares S&P 500 ETF is jam-packed with quality names like Apple, Microsoft, Amazon, Facebook, Alphabet, Tesla, Berkshire Hathaway, JPMorgan Chase, Johnson & Johnson, Visa, Walt Disney, Mastercard, Procter & Gamble, NVIDIA, Home Depot, PayPal, Netflix and so on. The list of names you’d be happy to have in your portfolio goes on and on.
The past returns have been exceptionally good. Over the last 10 years, iShares S&P 500 ETF has delivered an average return per year of 16.4%.
One of the strongest reasons for the good returns has been the management fees of 0.04%, which is almost nothing.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is an ASX tech share with a focus on processing digital donations for US churches and providing church management tools.
It’s highly effective at what it does, which is why it has managed to win over so many large US church clients. I believe that the trend towards digital payments is a one-way trend, so as the US economy recovers from COVID-19 I think that Pushpay could see even higher levels of total processing volume.
One of the most attractive things about Pushpay is how strong its operating leverage appears to be. In the FY21 half-year result it saw its EBITDAF (EBITDA explained – the F stands for foreign currency) margin go from 17% to 31%. That’s a huge increase in just one result and suggests the margin could go even higher as revenue increases.
Over the long term, Pushpay is aiming for $1 billion of annual revenue, with increased market share. It will take Pushpay a number of years to get there, but if it does it could mean that Pushpay is a very profitable business with the ability to pay attractive shareholder returns (dividends). It’s also looking to diversify its earnings in the future.
