At the weekend I looked at how successful $20,000 investments in a number of popular ASX shares had been over the last 10 years.
Whilst picking market-beaters is no easy feat, I believe the three shares listed below have the potential to achieve outsized returns over the next decade.
Here’s why I would invest $20,000 into them this month:
a2 Milk Company Ltd (ASX: A2M)
Concerns that this growing infant formula and fresh milk company’s margins may have peaked and its growth could now start to moderate have weighed heavily on its shares over the last couple of months. I think this has left them trading at a very attractive level and created a buying opportunity for investors. Whilst the explosive growth of the last few years may not be achievable in the future, I still believe it is well-placed to grow its earnings at an enviable rate thanks to solid demand for its infant formula in China and the growing footprint of its fresh milk business.
Cochlear Limited (ASX: COH)
Cochlear is a manufacturer and distributor of cochlear implantable devices for the hearing impaired. I believe it is well-positioned for strong growth over the next couple of decades thanks to the ageing population tailwind. As people age their hearing will more often than not deteriorate and require some form of assistance. I expect the growing number of over 65s globally to lead to increasing demand for its products and underpin above-average earnings growth for some time to come.
REA Group Limited (ASX: REA)
REA Group was one of the companies I featured at the weekend. Over the last decade its shares have provided incredible total returns for shareholders thanks to its emergence as the leader in property listings in Australia. Whilst its shares may not provide the same level of returns over the next decade, I believe they have the potential to be market beaters again. Especially given how the housing market appears to be at the start of an up-cycle. This is likely to drive strong listings volumes growth over the coming years and support strong profit growth.
And if you have funds leftover for another purchase, one of these hot stocks could potentially provide you with very strong returns over the next few years.
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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 Cochlear Ltd. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Cochlear Ltd. 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.