ASX shares that have a long-term growth outlook seem like attractive opportunities to me, particularly with how share prices share dropped this year.
I'm not sure whether every business has the potential to deliver strong growth over the long term. But, the ones that are able to deliver good compounding revenue growth over the years may be able to deliver good shareholder returns.
For that, I'm looking for ASX shares that have large addressable markets.
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VanEck Video Gaming and Esports ETF (ASX: ESPO)
This exchange-traded fund (ETF), if you haven't already guessed, is about getting exposure to the global video gaming and e-sports sector.
While it does provide focused exposure to a specific sector, it is somewhat diversified because it has 25 holdings. It is invested in businesses that are involved in game development and other parts of the gaming infrastructure (such as semiconductors and semiconductor equipment).
Let's look at some of the ASX share's largest holdings: Nvidia, Activision Blizzard, Nintendo, Advanced Micro Devices, Roblox, Tencent, Take-Two Interactive Software and Bandai Namco.
According to VanEck sources, the competitive video gaming audience is expected to reach 646 million people globally in 2023 and e-sports revenue has grown by an average of 28% per annum since 2015. As noted by VanEck, e-sports has created new potential revenue streams including game publisher fees, media rights, merchandise, ticket sales and advertising.
I think the sector is seeing long-term revenue growth, and the industry is seeing positive signs in multiple regions, including the Middle East and Africa.
It looks much better value after the VanEck Video Gaming and Esports ETF's 29% fall this year.
Bubs Australia Ltd (ASX: BUB)
Bubs manufactures and sells several products including goat milk formula, organic grass-fed (cow) formula, A2 beta-casein protein formula, organic baby food, and adult goat milk powder.
The business is growing at an impressive rate after its successful entry into the United States market as it tries to help alleviate the shortage there.
In the first quarter of FY23, group gross revenue increased 28% to $23.6 million, while infant formula more than doubled, contributing 92% of quarterly sales. However, adult goat dairy portfolio revenue was down 82% and business-to-business (B2B) revenue fell 91%, due to lockdowns in China and southeast Asia, according to Bubs.
Bubs produces Chinese-labelled products for China's general trade. The ASX share said:
Over the next several years, these two pathways are likely to both significantly exceed the current largest revenue source of English label products into China via the cross-border e-commerce.
If Bubs can hang on to (and grow) its market share in the US, then its future looks very promising.
With the Bubs share price down around 40% in three months, I think this is a good time to pounce for a long-term investment as it looks to grow internationally.
