I believe there are always opportunities to be found on the ASX share market. If someone were to give me $20,000 to invest in what I think could deliver great returns, there are a couple investments I'd make.
I usually like to mention the business Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) when it comes to companies I like in an article like this. It's one of my favourites, though I'm not expecting a high level of capital growth over the next three to five years, just a satisfactory level.
But, with the two ASX share investments I'm about to highlight, I think they have strong potential for capital significant growth in the coming years with $20,000.
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Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is one of the leading online retailers in the country, selling a vast number of homewares, furniture and home improvement products.
The business recently took a dive after its most recent trading update. Even so, revenue growth in FY26 to the AGM was still up in the high teens in percentage terms.
Temple & Webster is benefiting from the ongoing adoption of online shopping by households. I'm expecting Temple & Webster's market share to continue climbing in Australia if Australians follow the same e-commerce trends that are being seen in the US and the UK.
The business is poised to reach $1 billion in annual sales in the next few years. This could help deliver operating leverage for the business as fixed costs become a smaller percentage of revenue. Temple & Webster is also utilising more technology and tools to help it increase margins over time.
I think the market is now undervaluing the ASX share, particularly considering its home improvement segment is growing revenue at a strong double-digit rate.
Global X S&P World Ex Australia GARP ETF (ASX: GARP)
This is one of my favourite exchange-traded funds (ETFs) because of how it finds great, global businesses that are growing at a good pace, priced reasonably and have solid balance sheets.
When you put those elements together, you're left with a portfolio of excellent businesses that have been performing incredibly and have a lot of room for ongoing returns, in my view.
How does it pick these businesses? It looks at the 3-year sales per share and 3-year earnings per share (EPS) growth figures of the businesses, it looks at a valuation model similar to the price/earnings (P/E) ratio and it considers the quality (with the return on equity (ROE) and debt level) of the business.
While I'm not expecting the GARP ETF to continue its incredible recent returns at an average of close to 20% per year (over the last five years), I do think it can continue to deliver strong performance compared to most ASX shares.
On top of that, I think the GARP ETF provides effective diversification thanks to the 250 holdings being spread across a number of countries and sectors.
