It's no accident that the highest-quality ASX growth shares usually outperform the S&P/ASX 200 Index (ASX: XJO) over the long-term.
Strong business economics, great brand power and a healthy balance sheet are factors for success. I've said multiple times over the years that it can be a mistake to think that a business that has delivered significant growth has reached its peak. It can still be worth backing them.
Let's take a look at two long-term winners that are rated as buys by experts.
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REA Group (ASX: REA)
REA Group is the owner of Australia's leading property portal, realestate.com.au. It also owns a number of other property-related businesses including realcommercial.com.au, flatmates.com.au, Campaign Agent, Mortgage Choice and PropTrack. It also owns a majority stake in REA India, which is a market with significant long-term digital growth.
Broker UBS currently has a buy on REA Group shares, with a price target of $290. A price target is where an analyst thinks the share price could be in a year, so UBS is suggesting a possible rise of close to 30% over the next year.
The broker liked the FY25 result from the business, with 15% revenue growth and 23% net profit after tax (NPAT) growth despite election disruptions.
One of the main advantages of the business is its market leadership. This attracts the most potential buyers, which then attracts the most sellers, which attracts more buyers and so on. It's a powerful, self-fulfilling cycle.
UBS noted that in FY25, the ASX growth share reported a 55% increase in seller leads and four times more audience visits compared to the nearest competitor.
In FY26, UBS has factored in management's guidance of double-digit yield growth and high single-digit cost growth. Yield growth is set to be supported by a 7% price rise.
Over the longer-term the broker suggests REA Group could take a larger portion of the overall marketing spend, providing a "significant runway for further growth".
UBS thinks REA Group could generate $673 million of net profit in FY26 and this could reach $1.17 billion by FY30.
Xero Ltd (ASX: XRO)
Cloud accounting software provider Xero is another ASX growth share that UBS has a buy rating on.
The broker's price target on Xero shares is $215, which implies a possible rise of around 40% over the next 12 months.
Xero recently completed the acquisition of US business Melio. This business reported revenue of US$153 million in FY25, enabling Xero to increase its North American presence through payments and syndicated accounting offering.
Management said that payments is a potential US$29 billion total addressable market (TAM) opportunity, of which accounts payable is a US$14 billion, with around 90% of small and medium businesses TAM reportedly not using software yet.
Acquiring Melio gives Xero the opportunity to accelerate its presence and growth in the large US market.
UBS currently estimates that Xero's revenue could climb to NZ$2.47 billion in FY26 and NZ$2.9 billion in FY27. Net profit could reach NZ$322 million in FY26 and NZ$461 million in FY27.
By FY30, the ASX growth could reach NZ$4.48 billion of revenue and NZ$1.14 billion of net profit.
The prospects are bright for both Xero and REA Group.
