The idea of turning $10,000 into $100,000 is often met with disbelief. Yet, I personally have done this a number of times with ASX shares over the past thirty years. Sure, it's not an overnight thing. It also takes a degree of courage, especially when you see your companies fall in value by up to 40% at times. However, it is very definitely possible.
If you think back to where you were ten years ago, it seems like a long time, yet it also passed very quickly. If you have $10,000 to invest, then there are a few options to consider over a 5 – 10 year period. No matter what else happens, you will likely end in a better financial situation than if you did nothing.
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Creating $100,000 worth of ASX shares
The magic number here is 30%. If you are able to achieve a compound annual growth rate (CAGR) of 30% or higher over ten years then you will turn $10,000 into over $100,000. One example of an ASX share that has delivered this over the last decade is Saracen Mineral Holdings Limited (ASX: SAR). In slightly over ten years, between 2 January 2010 and 22 May 2020, Saracen had a CAGR of 30.7%. Consequently, if you had invested $10,000 at the beginning, you would have ended the period with $145,945.
Every now and then, you are able to find an ASX share that will really grow fast. For example, from 1 June 2017 until Wednesday this week, Afterpay Ltd (ASX: APT) has enjoyed a CAGR of 212.9%. Accordingly, it would have turned $10,000 into $306,452.
On that note, here are 3 ASX shares I think could help investors turn $10,000 into $100,000 over the next 5 to 10 years.
Jumbo Interactive Ltd (ASX: JIN)
Jumbo fell by 6.83% yesterday on release of its annual report. However, I thought the report contained predominantly good news. The company provides a software-as-a-service (SaaS) platform for selling lottery tickets on licence from Tabcorp Holdings Limited (ASX: TAH).
The annual report showed that closure of physical kiosks and news agencies pushed many ticket buyers online, even though it was a period of low jackpots. This ASX share saw an increase in total tickets sold by 9%. Accordingly, revenue was up by 9%, with earnings before interest, taxes, depreciation and amortisation (EBITDA) up by 6.1%. However, net profit after taxes (NPAT) was steady.
The reason for this was a ~$2 million increase in depreciation and amortisation. This money has not left the company and was used in part to help fund acquisitions and develop the company's website functionality.
I think Jumbo is undervalued by the share market right now. Aside from the levelling up growth, the company also has a lot of market space to expand into based on its business model. It also pays a ~3% trailing 12 month dividend yield. I would include $3,000 worth of Jumbo shares.
Whispir Ltd (ASX: WSP)
The Whispir share price fell by 6.49% yesterday despite this ASX share turning in a great annual report. The company reported a very solid set of figures and metrics. For example, it increased revenues by 25.5%, holds a gross profit margin of 62.5%, and 95.6% of revenues are annual recurring revenues (ARR), so like an annuity. Whispir is another SaaS company which helps organisations to communicate effectively from a function-rich platform.
One of the more interesting metrics the company published is the life time value (LTV)/customer acquisition cost (CAC). Anything below 1 is unprofitable, 3 is often quoted as an effective figure. Whispir has a ratio of 23.7. This is an outstanding figure. Lastly, and most importantly, the company acquired 630 new customers through FY20, 9 ahead of its prospectus forecast.
The company is sitting with $15.2 million in cash and equivalents and is spending mainly on customer acquisition and platform development. I really like this company, with a current market capitalisation of $464.32 I believe this ASX share has a long growth runway ahead of it. I would include $3,500 of Whispir shares.
Sezzle Inc (ASX: SZL)
I think that Sezzle is one of the best value buy now, pay-later (BNPL) companies available at this moment. Its annual report is due out soon and I am confident it will see a price uplift. Unlike Afterpay or Zip Co Ltd (ASX: Z1P), the company does not have to enter the $5 trillion United States market. It is already there and does not do business in Australia. In addition, its market capitalisation just broke the $1 billion mark on Wednesday. In contrast, both Afterpay and Zip Co have eye wateringly high market caps.
My belief in Sezzle comes partly because it is a US company targeting Millennials and Gen Z, but also because it doesn't trade in Australia. All Australian BNPL ASX shares are going to feel the impact of Klarna, the BNPL giant from Sweden. In Australia, this is 50% owned and operated by Commonwealth Bank of Australia (ASX: CBA). CBA is the nation's largest digital payments processor and is already moving to introduce Klarna at point of sale. I would include $3,500 of Sezzle shares.
