The longer we give our ASX shares to produce investment returns, the better the compounding and wealth-building can be. That's why a buy-and-hold strategy with excellent ASX growth shares could be compelling investments for the next 10 years.
Businesses that have large growth runways could make the biggest difference to our wealth over the long-term if they deliver on their potential.
Ideally, the businesses we may consider are growing rapidly and they could also deliver rising profit margins over that ten-year journey. That's why the two businesses below look appealing to me.
Xero Ltd (ASX: XRO)
Xero is a cloud accounting software business. It started out in New Zealand but it has since expanded to numerous countries including Australia, the UK, South Africa, Singapore, the US, Canada and so on.
As a technology business, it's able to grow quickly because there's not a physical limitation to selling new software, compared to selling cars, furniture, phones, food and so on. It also doesn't need a new warehouse or bigger store to continue growing. Software has very little cost to sell one more subscription, so Xero is able to achieve a strong gross profit margin.
In the FY25 result, Xero achieved a gross profit margin of 89%, up from 88.2% in FY24. This means a huge majority of the ASX share's additional revenue is converted to gross profit, which can be spent on growth or flow onto the other profit lines.
Its pace of financial growth is also impressive. In FY25, it grew operating revenue by 23% year-over-year to $2.1 billion, net profit after tax (NPAT) grew 30% to $227.8 million and free cash flow soared 48% to $507 million. We can see with those growth numbers the operating leverage it's achieving, and I'm expecting further improvements.
I think it can become a much larger business over the next ten years as it adds more technology and tools to its offering, wins more subscribers globally and delivers higher profit margins. If it can gain meaningful market share in the US, it could do particularly well over the long-term.
Tuas Ltd (ASX: TUA)
Tuas is one of the ASX growth shares I'm most excited about because of its potential to expand into new countries.
It's an Asian telco based in Singapore, where it has already reached a useful market share. In the FY25 half-year result, Tuas reported that its mobile subscribers had grown 23.7% to 1.16 million, which is quite a lot considering Singapore has a population of around 6 million.
But, places like Malaysia, Indonesia and other nearby countries have significantly more people than Singapore, giving Tuas a long growth runway if it can successfully tap into those markets. It could be a great buy-and-hold investment.
The ASX share is winning customers thanks to its focus on value which I believe can be appealing in every market.
The subscriber growth it's seeing is translating into strong financial growth for the ASX share. In HY25, revenue jumped 33.8% and operating profit (EBITDA) surged 48.8%. I'm optimistic that profit can continue rising faster than revenue.
I think the company's growth into the broadband market of Singapore is also a good move because it expands how much revenue and profit Tuas can generate from Singapore, its home market.
In ten years, I believe Tuas could have a larger market share in Singapore and the ASX share may have expanded to multiple countries in Asia.
