I believe long-term investing is the best approach for ASX shares. It gives our investments more time to compound into a pleasing number.
If $1,000 rises 10%, it becomes $1,100. But if an investment grows at 10% each year for eight years, it'll grow to $2,143. Simply achieving a solid rate of return over a long time period can lead to good results.
I'm optimistic that the following two investments can compound for a long time to come at a good pace.
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Guzman Y Gomez Ltd (ASX: GYG)
Guzman Y Gomez is a Mexican food business with restaurants in Australia, Singapore and Japan. Some of the Australian locations are corporate-owned, while the rest across Australia and Asia are franchise operations.
In terms of its compounding growth, the ASX share is delivering impressive results.
Network sales have grown at an impressive rate year after year. In FY26, Australian network sales grew 17.9% to $1.29 billion and Asian network sales rose 17.9% to $87.1 million. Total network sales grew 17.9% to $1.38 billion.
When a company's top line is growing in the teens, it looks like an appealing investment to me. Within that, comparable sales growth is an important driver of network sales because it means the existing network is growing. In FY26, comparable sales growth was 5.3%.
I'm optimistic the company's restaurant network can keep growing. In FY26, it added 32 Australian locations to bring the total to 255. Singapore saw three more restaurants added to 24 locations. Japan maintained five locations during the period.
It expects both the Singapore and Japan networks to grow in FY27. In Australia, it expects to open 35 new restaurants, three more than it opened in FY26.
GYG wants to reach 1,000 Australian restaurants within the next 20 years, which means a lot of compounding.
Net profit could grow even faster. FY26 underlying net profit after tax (NPAT) rose 29.7%. The company expects its operating profit margin to increase in FY27. As it grows, I expect the ASX share's margins to increase significantly.
Global X S&P World Ex Australia GARP ETF (ASX: GARP)
The other investment I want to highlight is this exchange-traded fund (ETF), which aims to give investors exposure to some of the most attractive global stock ideas.
These 250 stocks in the portfolio have strong earnings growth, solid financial strength and trade at reasonable valuations. The idea of 'GARP' stands for growth at a reasonable price. It can be a powerful combination.
To measure growth, the GARP ETF looks at a company's sales and earnings growth.
Value is measured with the price/earnings (P/E) ratio.
Quality is measured by financial leverage (meaning debt levels) and return on equity (ROE).
Since inception in September 2024, the GARP ETF has returned an average of 15.4% per year. I think virtually any ASX share would be happy to generate a return of that size.
