There are some ASX shares where it takes years for the investment thesis to play out. There are other ASX shares that could be worth buying for what may happen in 12 months or less.
No-one can truly tell you what's going to happen tomorrow or next week with the share market. But I think 12 months is a long enough time period where your investment idea can prove you right through two reporting seasons, perhaps it only needs one result to prove you right.
With that in mind, here are three ASX shares that I think could produce good growth over the next 12 months:
Share 1: Costa Group Holdings Ltd (ASX: CGC)
Costa is Australia's largest agricultural businesses. It grows tomatoes, avocadoes, mushrooms, berries and citrus fruit.
The last couple of years have been very tough for Costa. There's the COVID-19 global pandemic happening right now. Bushfires were a worry during last summer, a fire caused some damage at one of Costa's farms. The agricultural ASX share has had to deal with the terrible drought. Fruit flies were an issue for its citrus division.
Can it get any worse after all of those issues in such a short time? Hopefully not.
Food prices are rising and this should help Costa a lot. It largely costs Costa the same to grow produce whether food prices are cheaper or a bit more expensive – so higher revenue is mostly just extra profit.
I think the higher food prices could have a very helpful effect on Costa over the next 12 months. The drought ending would also be very good if it keeps raining in those dry hard-hit areas.
Share 2: Sydney Airport Holdings Pty Ltd (ASX: SYD)
Sydney Airport is one of those ASX travel shares that has suffered enormously because of the limitations of travellers coming to Australia. Domestic travel has also suffered a big hit. In April 2020 the airport operator saw total passengers decline by 97.5% to 92,000. International passengers were down 96.9% to 43,000 and domestic travellers were down 97.9% to 49,000.
However, the Sydney Airport share price is recovering as Australia's domestic travel restrictions lift. Since 3 April 2020 the Sydney Airport share price has risen around 21%. But there's still a long way to go before international travel restrictions improve. But there is some promising news regarding the treatment of COVID-19 with an existing drug seemingly helping some suffering COVID-19 patients recover.
Share 3: Macquarie Group Ltd (ASX: MQG)
Macquarie is by far my favourite large ASX bank share. There are two key reasons why.
Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) are all heavily focused on Australia and New Zealand. Macquarie generates about two thirds of its earnings outside of the local region. I think that's good international diversification.
The second reason is that the big four ASX banks generate most of their earnings from loans. Macquarie has a loan book too, but its earnings are more evenly spread across other divisions. For example, it's one of the world's biggest infrastructure asset managers. It also offers numerous investment banking services such as its involvement with initial public offerings, capital raisings, acquisitions and so on.
I like that Macquarie can pivot towards whatever sector or region it thinks is a growth area. A focus for the ASX share right now is renewable energy.
I think that Macquarie's share price can continue to rise into 2021 as the world economy heads towards normality again, or at least a new normal.
Foolish takeaway
I think these three ASX shares could produce solid returns over the next 12 months. If I had to pick one of three, I'd go for Macquarie. I think it's a high-quality business that has very good management and is also focused on shareholder returns with a good dividend yield.
