ASX growth shares may be the place to look for long-term opportunities because of their ability to deliver compound annual growth over several years.
Some businesses have already grown a lot to become among the biggest in their sector such as Westpac Banking Corp (ASX: WBC).
These two options could have a chance of producing good growth over the coming years:
Airtasker Ltd (ASX: ART)
Airtasker describes itself as a community platform that connects people who need to outsource tasks and find local services, with people who are looking to earn money and ready to work.
There are a wide variety of tasks that can be put onto the platform such as home cleaning, handyman jobs, admin work, photography, graphic design or website building.
The business can benefit from network effects. If it can attract more high-quality Airtaskers to do jobs, then that would also attract more potential customers, which attracts more people and so on.
Airtasker believes it can fulfil a gap in the market where it’s tricky for people to buy services.
It has one of the highest gross profit margins on the ASX, at 93%. It spends 4.9% on payment costs and 2.1% for insurance costs. That works well when combined with fast revenue growth.
In FY21, the ASX growth share reported revenue growth of 38% to $26.6 million. That also beat the forecast of $24.5 million.
The FY21 gross profit rose 39% to $24.8 million.
The capital light model of the business is helping it generate positive operating cashflow, which was $5.5 million in FY21. This was ahead of the prospectus forecast of $0.1 million. Cashflow is what can help fund Airtasker’s organic growth spending in the future.
The business is now also focused on international growth in the UK and US. In the US, it has bought Zaarly. Airtasker is launching in Kansas City, Dallas and Miami in the first half of FY22. In the UK it saw gross merchandise volume growth of 232% year on year and 93% quarter on quarter.
It’s currently rated as a buy by Morgans, with a price target of $1.30.
VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)
Exchange-traded funds (ETFs) can be an easy way to get exposure to certain growth trends. Video gaming and e-sports is one area seeing double digit growth, which is what this ETF ASX growth share is about.
The biggest ten holdings in the portfolio includes: Nvidia, Advanced Micro Devices, Sea, Tencent, Unity Software, Activision Blizzard, Nintendo, Electronic Arts, Netease and Bandai Namco.
VanEck, which is the provider of this video gaming and eSports ETF, says that e-sports revenue has grown by an average of 28% per year since 2015. The video gaming industry as a whole has seen 12% average annual growth since 2015.
The Asia Pacific region is estimated to be around half of the global gaming market, with revenue of around US$78.4 billion. By 2023, the global games revenue is projected to be around US$200 billion.
VanEck also says that there are now more than 2.7 billion active gamers worldwide. The video game business is now larger than both the movie and music industries combined, making it a major entertainment industry.
In a bullish conclusion about this ASX growth share, VanEck says that e-sports and video games are a long-term disruptive force in the traditional media entertainment and technology industries.