Having a fear of missing out (FOMO) on returns from ASX shares can be a troubling fear to have about something. Actually missing out on high-flying ASX shares is not ideal.
I'm a fan of both of the below businesses, but I've missed out on some major gains that have occurred in the last couple of years. These businesses have been on my radar for years, and I simply didn't get around to buying them. Let me explain why they're doing so well and why I'm closely following their growth paths.
Xero Ltd (ASX: XRO)
Xero is one of the world's largest cloud accounting operators. It has a significant presence in countries like Australia, the UK, New Zealand, and the US. The company is global, with a notable presence in places like Canada, Singapore, and South Africa. Impressively, the Xero share price has approximately doubled in the past two years.
Its success is rooted in its software being simple for users and offering significant automation and time-saving tools. This has allowed it to win over millions of subscribers, have a high subscriber retention rate and increase subscription prices with little detrimental effect.
The recent FY25 half-year result demonstrated these effects in action. Subscribers grew 6% to 4.19 million, operating revenue grew 25% to $996 million, the average revenue per user (ARPU) improved 15% to $43.08, and the subscriber retention rate was 99%.
With the company's very high gross profit margin of 88.9%, almost nine out of ten revenue dollars generated by the business turn into gross profit, which can be used to spend on growth or improve the company's other profit measures (such as net profit after tax).
HY25 saw the high-flying ASX share's net profit rise 76% to $95 million, and the free cash flow surge 96% to $208.7 million.
I expect the business can continue to win over new subscribers and deliver even higher net profit thanks to that very high gross profit margin.
Nick Scali Ltd (ASX: NCK)
Nick Scali is not a high-flying ASX tech share, but it has done almost as well as Xero in the past couple of years, rising by roughly 75%.
A couple of years ago, the business was experiencing market worries about its profit outlook due to the high cost of living potentially impacting furniture demand.
But, throughout the last several years, the business has impressed me with its ability to achieve a high return on equity (ROE) – it makes strong profit for how much shareholder money is kept within the business, and it's able to make further good returns with retained profit.
That high ROE supports the company's decision, in my view, to roll out more stores in Australia and New Zealand.
The high-flying ASX share has also extended its growth runway by acquiring Plush in Australia and Fabb Furniture in the UK. Buying Plush allows the business to target a somewhat different part of the Australian market, while the UK market offers significant rewards because of the larger population.
Nick Scali's UK division's top-selling product is also the top-seller in ANZ, suggesting that Nick Scali's ANZ product range can resonate with UK customers and justifies the UK acquisition move.
I wish I had invested when the market was more fearful about the retail sector, but I wouldn't be surprised if I bought the stock in the future.
