At the weekend I looked at how successful $20,000 investments had been in a number of popular ASX shares over the last 10 years.
But that was then and this is now. So, I thought I would take a look at three shares which I think could generate very strong returns for investors over the next 10 years.
Here's why I would invest $20,000 in these S&P/ASX 200 Index (ASX: XJO) shares when the market volatility eases:
Altium Limited (ASX: ALU)
This leading provider of printed circuit board (PCB) design software globally has seen its share price sink materially lower in 2020. Whilst this decline is disappointing for shareholders, I believe it is a real gift to non-shareholders. I think Altium is well-positioned to grow materially over the next decade due to its exposure to the Internet of Things (IoT) market. This is because most IoT devices have a PCB inside them. So with Statista estimating that the IoT market will grow from 23 billion devices in 2018 to 75 billion devices in 2025, demand for its industry-leading software looks set to grow strongly. I expect this to lead to strong profit and dividend growth over the next decade.
Aristocrat Leisure Limited (ASX: ALL)
On Monday this gaming technology company's shares crashed lower and hit a 52-week low. This has been quite a turnaround for Aristocrat Leisure, considering its shares were at a record high on February 20. Concerns over the impact of the coronavirus on demand for its gaming machines has been weighing on its shares. Especially after Crown announced plans to deactivate every second machine as part of an effort to force social distancing and reduce the spread of the virus. Whilst I suspect that demand will soften in the immediate term, I expect a big rebound once conditions return to normal. In the meantime, I don't believe its fast-growing Digital business will be negatively impacted. In fact, it could benefit from gamers staying home instead of going to casinos to play.
Xero Limited (ASX: XRO)
Another high quality share which I think has been oversold is Xero. I believe the cloud-based business and accounting software provider would be a great long-term investment option for investors. This is due to the company's sizeable global market opportunity, the quality and stickiness of its product, and its strong pricing power. I believe the latter two are evident in both its customers numbers and churn rate. During the first half of FY 2020, Xero reached 2.057 million subscribers and reported a churn rate of just 1.1% despite lifting its prices in some markets. Another positive is that less than 20% of the global SME market were using cloud-based accounting software at that point. I believe this gives it a massive runway for growth.
