There are a few ASX share investments that have a very compelling future, in my opinion. They look good value to me today and could deliver excellent returns over the long-term.
The power of compounding should never be underestimated. When left to compound for a decade, an investment can grow significantly.
We're going to look at two investments I think could deliver seriously impressive returns from their current valuations.
Let's get into these two share options on the ASX.
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L1 Group Ltd (ASX: L1G)
L1 Group is a leading fund manager offering a range of high-performing strategies for investors to take advantage of. The listed investment company (LIC) L1 Global Long Short Fund Ltd (ASX: GLS) is one of the newest additions to L1 Group's stable of offerings.
It adopts strategies that allow investors to invest in areas such as ASX shares, international shares, global shares and so on.
L1 Group has a good track record of investment performance, which helps push up the funds under management (FUM) organically, helping increase management fees, performance fees and overall profitability.
In the coming years, I expect L1 Group to launch new funds, potentially take over other fund managers (as it did with Platinum), and pursue partnership strategies.
According to the projection on CMC Invest, the business is trading at around 22x FY27's estimated earnings, with a possible 29% growth of earnings per share (EPS) in FY28. In my view, this makes the ASX share very reasonable value.
Betashares Global Quality Leaders ETF (ASX: QLTY)
One of the best places to invest for the next decade, in my opinion, is high-quality international shares.
This exchange-traded fund (ETF) is all about giving investors access to great businesses that tick a number of boxes.
There are four elements that a business must have to count as a global quality leader.
First, it should have a high return on equity (ROE). That means the companies make a good level of profit for the amount of shareholder money retained within the business. It could also suggest a good return on future additional retained profit.
Second, these companies should have a low debt-to-capital ratio. A low debt level is a good sign of financial health.
Third, these businesses rank highly on cash flow generation ability.
Finally, they should have stable earnings. In other words, it's rare for profit to go backwards. If profit rarely declines, that suggests profit is usually rising – a great tailwind for share price growth.
With a portfolio of 150 (non-ASX share) names, it can give investors diversification and generate good returns. Since inception in November 2018, the QLTY ETF portfolio has returned an average of 13.25% per year. That's a solid level of compounding, in my opinion.
