These amazing ASX shares could be compounding machines

Let's see why these quality shares could be key to generating big returns over the next decade.

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I believe that one of the best ways to grow your wealth is through buy and hold investing.

By investing with a long term outlook, investors are able to fully leverage the power of compounding.

This is what happens when you generate returns on top of returns. It explains why $10,000 compounding at 10% per annum turn into $11,000 after one year but approximately $26,000 after 10 years.

But not all ASX shares are born equal. So which ones could be compounding machines over the next decade? Let's take a look at three that analysts think could deliver the goods for investors.

CSL Ltd (ASX: CSL)

CSL has long been one of the ASX's most respected companies — and for good reason. It operates a global plasma products business and a vaccines division, both with high barriers to entry and mission-critical demand. Despite a tough few years following the pandemic, CSL appears to be entering a margin recovery phase.

Bell Potter expects this to underpin strong earnings growth in the coming years. It recently said:

CSL presents an attractive buying opportunity as we expect the margin recovery phase for CSL to drive above-market earnings growth over the next few years […] Given the company's proven quality and growth prospects, we believe significant upside remains.

Trading on a forward P/E ratio of approximately 22x, which is well below its 10-year average of ~31x, CSL looks like a high-quality compounder trading at a discount.

Goodman Group (ASX: GMG)

Another ASX share that could be a compounding machine is Goodman Group. It isn't just a landlord — it is a developer and manager of next-generation logistics, warehousing, and data centre infrastructure. As e-commerce and cloud computing demand accelerates, Goodman is reaping the benefits through strong development margins and tenant demand.

Bell Potter is also positive on Goodman. It notes:

The company is well-leveraged to data centres, a high-growth sector that is driving a strong future development pipeline at higher margins […] we believe the current valuation offers good long-term value for investors.

With a forward P/E of ~25x and double-digit earnings growth forecast, Goodman could be a compelling option for long-term compounding returns.

WiseTech Global Ltd (ASX: WTC)

Finally, WiseTech Global is one of Australia's biggest tech success stories. Its flagship product, CargoWise, is a mission-critical logistics platform used by many of the world's largest freight operators. The company boasts 80–85% recurring revenue, exceptional margins, and a clear global expansion strategy.

Bell Potter thinks very highly of the company. It said:

CargoWise is the market leader in freight forwarding software and we expect growth to accelerate due to the launch of three new products, as well as ongoing global roll-out wins […] WTC is a growth story with strategic acquisitions representing upside potential.

While its shares trade at a premium, Bell Potter notes that this is justified by a three-year earnings per share CAGR of 33% and a dominant market position. This is the kind of formula that can compound quietly for years.

Motley Fool contributor James Mickleboro has positions in CSL, Goodman Group, and WiseTech Global. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended CSL and Goodman 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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