The best time horizon for investing in ASX stocks is the long term, given the power of compounding.
The two investments I'll tell you about are impressive players at what they do, and their outlook for growth looks promising.
While earnings growth is not certain, I believe the two ASX stocks listed below are likely to experience pleasing progress in the years ahead.
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Betashares Global Cybersecurity ETF (ASX: HACK)
One of the most undeniable tailwinds of the world is the increasing digital nature of activities in our lives, whether that's online banking, e-commerce, communication, working, connecting with government services (including taxation forms), learning, and so on.
All of those activities require a safe internet connection with protection against cybercriminals.
The HACK ETF gives investors the ability to invest in the global cybersecurity sector, with exposure to both global leaders and emerging players.
There are a number of recognisable businesses in the portfolio, including Broadcom, CrowdStrike, Cisco Systems, Infosys, Palo Alto Networks, Leidos, and Fortinet.
I'm expecting the underlying earnings of these businesses to continue rising for the foreseeable future as governments, businesses, and households strive for full protection from cybercriminals.
The more the world is connected to the internet, the more integral the companies in this ASX ETF become.
According to BetaShares, the HACK ETF has returned an average of 18.6% per year since its inception in August 2016. Past performance is not a guarantee of future returns, of course, but I think the future bodes well.
L1 Group Ltd (ASX: L1G)
L1 is a funds management business which recently became noticeably bigger (and a listed ASX stock) after acquiring the fund manager Platinum.
Many of the company's key investment strategies have performed strongly compared to their benchmarks over the years, which helps drive funds under management (FUM) higher and encourages clients to allocate more FUM to L1.
L1 Capital has delivered average organic FUM growth of 30% per annum, without using its balance sheet. Funds management is a capital-light sector. I'm expecting the company's FUM to continue rising, though not necessarily at 30% per year. However, it is expanding its distribution into North America, Europe, the Middle East, and Africa regions.
On the cost side of things, the business is looking to deliver cost reductions of between $30 million to $35 million within 18 months of the merger between L1 Group and Platinum. This could help improve the profit margins of the business.
The ASX stock has also highlighted that there are opportunities to put capital into very compelling, value-adding ideas, though it will be "selective in pursuing opportunities".
At the time of writing, the L1 Group share price is valued at 20.1x FY27's estimated earnings. While it's not cheap, I think there is plenty of growth potential ahead.
