ASX growth shares can be some of the most fun and exciting to own because of how they regularly produce strong results for investors.
Businesses that have strong long-term earnings growth potential can lead to great returns because share prices usually follow the direction of earnings over time, even if there's volatility along the way.
The two investments I want to highlight give investors exposure to some of the best businesses around the world.
TechnologyOne Ltd (ASX: TNE)
I think this business is one of the most impressive ASX growth shares available.
It provides essential software to a number of subscribers, including councils, businesses, government agencies, and universities. These are the types of clients who need to use software, even in a downturn, and are willing to pay for an offering that's easy to use and provides them with efficiency benefits.
TechnologyOne invests a significant portion of its revenue each year to improve its software, enabling it to target a 15% revenue growth rate from its existing customer base each year as its clients pay more for it.
If the business continues growing revenue by at least 15% annually, it will double in size in five years.
One of the main reasons why I believe the business can significantly grow its revenue from here is that it's looking to grow in the UK – TechnologyOne's software could translate well to that market. In the FY25 half-year result, the company reported its UK annual recurring revenue (ARR) soared by 50% to $43.1%, representing less than 10% of total ARR at that stage.
Due to the company's software nature, I'm expecting its profit margins to rise as its client base and revenue grow. With strong profit growth likely in the foreseeable future, I think this is one ASX growth share to watch.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
This is an exchange-traded fund (ETF) that invests in a portfolio of US businesses with very strong economic moats.
An economic moat is another way of describing competitive advantages. That can come in a variety of different forms, such as intellectual property, cost advantages, network effects, and so on.
The reason why this fund has a 'wide' economic moat is that the businesses inside this ASX ETF are judged to have economic moats that could allow the businesses to almost certainly earn strong profits in the next decade and more likely than not for two decades.
The MOAT ETF only invests in these US businesses when analysts believe the business is trading at an attractive price. I'm calling this an ASX growth share because of its strong returns and because we can buy it on the ASX. It has around 50 holdings, so it's an appealing pick for diversification purposes.
Excellent businesses at compelling prices are a very appealing investment. That's why, in my view, the fund has managed to deliver an average return per year of 15.2% over the last decade. While that's not guaranteed to continue, it has delivered impressively consistent returns over the years.
