The ASX share market can be a fruitful place to find businesses that could deliver good returns. I believe there are a few businesses that may be able to significantly outperform because of their growth outlooks.
All of the uncertainty created by elevated inflation and higher interest rates has opened up some possible opportunities to invest in undervalued businesses.
If things go well, I believe the following ASX shares could do well by the end of 2025.
Frontier Digital Ventures Ltd (ASX: FDV)
This business is involved with investing in and operating leading online 'classifieds' marketplaces in emerging regions. It's involved in Latin America, the Middle East, North Africa and Southeast Asia, with a focus on property and vehicles.
Some of the ASX's best long-term performers have come from the classifieds space, including REA Group Limited (ASX: REA) and Carsales.com Ltd (ASX: CAR).
The underlying Frontier Digital Ventures businesses have a number of positive potential tailwinds including ongoing digital adoption of the internet and internet services, the scalability of online platforms, and the potential for expansion into other services as we've seen REA Group do with other real estate-related offerings like mortgage broking.
The ASX share generated $0.9 million of statutory earnings before interest, tax, depreciation and amortisation (EBITDA) in the first half of FY23, up $3.4 million year over year. It's the most profitable it has ever been, yet the Frontier Digital Ventures share price is down 76% since 31 December 2021.
If it just goes back to the February 2023 share price of 74 cents, that would be a 100% return. I think investors have become far too negative on this business.
Siteminder Ltd (ASX: SDR)
This business claims to be the world's leading open hotel commerce platform and is working on opening up every hotel to access online commerce. It has been used by tens of thousands of hotels in 150 countries.
FY23 saw the business still generating net losses, but its profitability is rapidly improving. Underlying EBITDA improved from a loss of $14.6 million in the first half to a loss of $7.4 million in the second half. The total revenue for FY23 jumped 30.5% to $151.4 million.
It's investing heavily for growth, but it's expecting to become underlying EBITDA profitable and underlying free cash flow positive in the second half of FY24.
The ASX share has a goal of organic revenue growth of 30%. If revenue were to grow at that pace in FY24 and FY25, it wouldn't be far off doubling compared to FY23.
Lovisa Holdings Ltd (ASX: LOV)
Lovisa is a retailer of affordable jewellery in many countries around the world.
It's very cheap for the business to set up new stores because of how low cost the products are. One of the most compelling things to me is that it just needs to open new stores in regions it is under-represented. Places like the US, Mexico, South America and Asia could be great places for expansion.
In the next couple of years, it could add hundreds of more stores to its network, which could help drive earnings and the Lovisa share price.
I think the size of the profitability boost it can achieve is enormous thanks to rolling out stores in markets it has already entered. It's reportedly getting close to launching in the mainland Chinese market.
The company is also sharing some of its profit in the form of dividends, which is helpful for returns.
