Revealed: 3 ASX shares that could be tomorrow’s blue chips

One of the best companies you could have invested in 10 years ago was TPG Telecom Ltd (ASX: TPM). A $25,000 investment in its shares in 2006 would now be worth a huge $418,000 in share price gains alone. Factor in the dividends and you’re edging closer to $450,000.

In my opinion this goes some way to demonstrating how successful buy and hold investing can be, especially if investors can find future blue chips early on.

I’ve picked out three shares which I believe could one day become blue chips, making them great candidates for a long-term buy and hold investment today. Here they are:

Appen Ltd (ASX: APX)

Appen is one of my favourite shares in the information technology sector. The company is a leader in the growing language technology and machine learning market, providing high quality data critical for automatic speech recognition to some of the world’s biggest and brightest companies. As well as having government security agencies on its books, the company also counts Facebook and Microsoft as clients. In its recent interim results Appen increased its half year net profit by 102% to a record $5.4 million. With strong growth prospects and a debt-free balance sheet, Appen would be at the top of my list of buys.

Freelancer Ltd (ASX: FLN)

Freelancer is the owner and operator of the largest outsourcing marketplace in the world. At the end of July the company had over 20 million registered users and had posted 9.6 million projects in over 900 areas as diverse as web development, marketing, astrophysics, and aerospace engineering. In its half year results Freelancer posted an impressive 56% increase in revenue to $26.2 million. Whilst the company is still not yet profitable, it is only a matter of time before it is in my opinion. For the first half of the year, Freelancer made a $100,000 loss, compared to an $800,000 loss in the prior corresponding period.

Mayne Pharma Group Ltd (ASX: MYX)

This growing Australian pharmaceutical company recently posted a stunning 379% jump in full year net profit to $37.4 million. But the great news for investors is that these results do not include the recently acquired portfolio of drugs from industry giants Teva Pharmaceuticals and Allergan. That lucrative acquisition closed in August and is expected to be significantly accretive to earnings moving forward according to management. Whilst its shares may be changing hands at around 30x full year earnings, I feel they’re worth every cent of it.

Finally, before making an investment in any of these shares I would highly recommend taking a look to see if your portfolio contains either of these three wealth-destroying ASX shares.

3 Rotten Shares to Sell, and 1 to Buy Today

After a double-digit rally for the ASX since 2016 lows, investors should be on high alert. You'll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an "emergency low." Simply click here to uncover these stocks.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Bruce Jackson.

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