I’m a big believer in investing in quality ASX growth shares. If you had picked up Afterpay Ltd (ASX: APT) shares three years ago and held onto them until today, you would be up over 2000%. That means your initial $5,000 investment would give you a total return of more than $100,000. No property or term deposit can give you a return of 20x in just a few short years.
Of course, companies like Afterpay only come around so often. However, the idea is to monitor the share market news and look into ASX shares that present strong growth potential.
If you can identify a quality ASX growth share, it could be worth a fortune down the track.
Below, I have picked two ASX growth shares I believe have the potential to turn $5,000 into $100,000 in under a decade.
2 ASX growth shares to help turn $5,000 into $100,000
Recce Pharmaceuticals Ltd (ASX: RCE)
Recce is a medical company that is involved in development of synthetic antibodies for the treatment of blood infections and sepsis. The Australian biotech has been creating tailwinds over the past few months with a number of positive announcements.
Just today, Recce updated the market on its fight against COVID-19 with upbeat results. The Reece 327 (R327) and Reece 529 (R529) compounds showed reductions in the virus in an in-vitro study using organoids made from human airway epithelial cells.
The Recce share price is up almost 400% in year-to-date-trading, closing today’s session 12.5% higher at $1.62. The promising medical company has a market capitalisation of just $237 million. If it can reach the likes of investor favourite Mesoblast Limited (ASX: MSB) which has a market capitalisation of $2.75 billion, then shareholders could be expecting returns for Recce of more than 1000%.
Aerometrex Ltd (ASX: AMX)
Aerometrex is an aerial mapping company specialising in aerial imagery, photography, LiDAR, 3D modelling and aerial imagery subscription services. The company operates throughout Australia, and has delivered contract work to Europe, New Zealand and the United States.
The Aerometrex share price has fallen nearly 37% during year-to-date-trading as COVID-19 continues to weigh down the broader market. Pleasingly, however, the company advised it had seen minimal impact to its operations in light of the restrictions.
Aerometrex performed strongly in its FY20 results released last month. The aerial mapping specialist reported growth in key sectors such as its LiDAR and 3D portfolio as well as its MetroMap subscription-based service.
With a market capitalisation of just $120 million, this ASX growth share can currently be bought for $1.27. Aerometrex’s closest competitor Nearmap Ltd (ASX: NEA) is trading at $3.00 and has a market capitalisation of $1.36 billion. This means that Nearmap is more than 10 times bigger than Aerometrex. So, should Aerometrex deliver in the coming years, the potential rewards could be huge for shareholders.
I think both these ASX growth shares are poised to go materially higher in the near future. Depending on your risk profile, however, I would suggest allocating no more than around 5% of your portfolio to small-cap ASX growth shares.