3 ASX growth stocks I think could turn $100,000 into $1 million

Here are three opportunities I'm backing for long-term success.

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There aren't too many businesses that will end up delivering huge capital returns over the long term. It's impossible to say what future returns will be, we can only guess and forecast. I'm going to talk about three ASX growth stocks that I think could, over the coming years, have a chance at turning $100,000 into $1 million.

A return of 10 times over a decade or less would be an incredible return, so perhaps none of the ones I'm going to mention may achieve that feat. But even a return of 500% over a decade would be wonderful.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a global retailer of affordable jewellery, which is typically focused on younger shoppers.

The business earns a strong level of profit for each average established store, and it doesn't cost much to set up each store because the products are so cheap. So it makes a lot of sense for the company to roll out as many stores as it can globally, in a financially disciplined way.

At the end of the FY23 first half, it had 715 stores, compared to 629 at the end of FY22. That's an increase of 86 stores in just six months.

In Australia, it had 163 stores at the end of HY23, and in the USA it had 155 stores (up from 118 at the end of FY22). Thus both countries have similar store numbers. The US population however is over 330 million, compared to 26 million for the Australian population, so there's definitely scope to increase its store count by more than 10 times in the US.

Across the globe, I think Lovisa can increase its store count substantially considering it has only just entered some populous countries like Italy, Canada, Mexico, Poland and so on. There's enormous growth potential in countries like India and mainland China if the ASX growth stock chooses to go there.

Growing scale benefits could see Lovisa's profit grow even faster than revenue over time, helping justify a much higher Lovisa share price (and dividend).

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster, the e-commerce retailer of homewares and furniture has a goal of becoming the biggest player in Australia, online or offline.

The business can become much bigger if it's able to keep growing its revenue. It recently gave an update for FY24 to 13 August 2023 which said revenue had risen 16% year over year thanks to both repeat and new customers.

The future looks bright for the company with the percentage of revenue coming from repeat customers continuing to rise (this represented 54% of total orders in FY23). Revenue per active customer continues to grow as well, with a 6% increase in FY23.

It's expecting to improve profit margins as it scales. The business doesn't have stores, so its fixed cost base can be leveraged across a growing amount of sales. Being bigger also means it can get better prices on products from suppliers, spend more on marketing and so on.

The ASX growth stock also expects that AI can help its sales conversion, product descriptions and customer satisfaction, while offline retailers may struggle because staff and lease costs "cannot be minimised", according to Temple & Webster.

In three to five years, it's hoping to more than double sales to at least $1 billion.

Airtasker Ltd (ASX: ART)

Airtasker describes its business as Australia's leading online marketplace for local services, "connecting people and businesses who need work done with people who want to work."

The Airtasker share price has sunk to just 20 cents, meaning it's starting from a low base, and it's showing some positive developments.

In the fourth quarter of FY23, it reported positive Australian net earnings before interest, tax, depreciation and amortisation (EBITDA) of $2 million. It also said that it's positioned to be cash flow positive for the full 2024 financial year.

FY23 fourth-quarter revenue rose 20.6%, which is a strong compounding rate.

The ASX growth stock has a small but rapidly growing presence in both the US and UK, which could become much bigger than the Australian operations in future years. FY24 fourth quarter showed that UK trailing twelve-month (TTM) revenue had increased by 92.5% to £483,000, while US TTM posted tasks were up 158% to 64,000.

If revenue keeps compounding at a double-digit rate for many years, then the company's gross profit margin of over 90% should help it deliver impressive financials once it has scaled up and become a bigger business.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa and Temple & Webster Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Airtasker. The Motley Fool Australia has recommended Lovisa and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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