I think that some ASX shares could make great investments and could change your life.
It’s unlikely that a single investment can make you a millionaire. But an investment that turns out very well can lead to an attractive increase in net worth.
The growth in your wealth will depend on how much you invest and how much your investments grow.
I think a decently-sized investment into one (or more) of these ASX shares could change your life:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a leading ASX growth share. It is aiming to hit US$1 billion of annual revenue in the coming years by servicing the large and medium US church sector. The sector reflects a very large opportunity.
In FY20 it processed US$5 billion of donations through its system, which was 39% higher than the previous year. This helped revenue grow by 32% in just one year to US$129.8 million. During the year it also acquired Church Community Builder, which should help organic revenue growth.
I think Pushpay could be an impressive market-beater from here because of its economies of scale. In FY20 the company grew its gross profit margin by five percentage points to 65% (up from 60%) and improved the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin by five percentage points to 22% (up from 17%).
Ultimately, an ASX share should be judged by its profit growth. Its profit can grow even faster than its revenue if its margins keep rising.
In FY21 Pushpay is looking to at least double its FY21 EBITDAF to US$50 million. The Pushpay share price is currently trading at 38x FY21’s estimated earnings.
WAM Microcap Limited (ASX: WMI)
I think WAM Microcap could be one of the best listed investment companies (LICs) to own.
The investment team at Wilson Asset Management (WAM) target ASX share small caps with market capitalisations under $300 million. WAM Microcap has been very good at this since it listed in June 2017.
Since inception in June 2017, WAM Microcap’s portfolio has returned an average of 21.7% per annum before expenses, fees and taxes. That’s a strong return in my opinion.
One of the benefits of LICs is that they can turn investment gains into dividends for shareholders. It has steadily increased its dividend since it started paying one a few years ago. It has also been paying special dividends.
With the strong portfolio returns, I think WAM Microcap is a good ASX share for steady capital growth and high levels of dividend income if the special dividends keep flowing with strong investment outperformance.
At the current WAM Microcap share price it offers a grossed-up ordinary dividend yield of 5.4%.
Redbubble Ltd (ASX: RBL)
Redbubble is one of the world’s leading online artist marketplace businesses.
The company has benefited from the shift to online shopping during this difficult period. The FY20 result saw Redbubble’s marketplace revenue increase by 36% with operating earnings before interest, tax, depreciation and amortisation (EBITDA) rising by 141%.
It started to allow artists to sell masks during the second half of FY20 which help drive revenue higher even faster. FY20 fourth quarter revenue increased by 73% and July 2020 revenue for the ASX share soared 132% with similar revenue levels in the first two weeks of August.
I believe Redbubble is going to do well again in FY21 and adding new product categories could improve its network effects even more.
Over time the company is targeting $1 billion of annual revenue, which gives it plenty of room to grow. There is also plenty of potential for the profit margins to keep improving.
At the current Redbubble share price it’s trading at 32x FY20’s free cashflow.