Some of the best long-term investments are businesses that can keep growing without having to reinvent themselves every few years.
They usually have strong competitive positions, plenty of room to grow, and the ability to reinvest profits at attractive returns.
With that in mind, here are three ASX shares that I think have many of the ingredients needed to compound shareholder wealth over time.
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Life360 Inc (ASX: 360)
The first share is Life360. Its family safety app has become a big part of everyday life for millions of families, offering location sharing, driving reports, crash detection, emergency features, and a growing range of other services.
What I like about Life360 is how much more it could potentially get from the audience it has already built.
Most users access the platform for free, which gives the company a huge pool of people that could eventually move onto paid memberships. At the same time, Life360 can keep adding reasons for families to spend more through new services and higher-value subscriptions.
There is also a significant international opportunity. The US is its most developed market today, but there is no obvious reason why its overseas business couldn't eventually become much larger.
If Life360 can keep growing its audience while getting better at monetising it, I think the company could be considerably bigger in a decade.
Pro Medicus Ltd (ASX: PME)
Another ASX share I think has excellent long-term prospects is Pro Medicus.
Its Visage imaging platform is used by major hospitals and healthcare groups, particularly in the United States, to manage and interpret huge volumes of medical images.
And those volumes aren't standing still. Healthcare systems are performing more scans, while radiologists are being asked to deal with increasingly heavy workloads. Software that allows them to work faster and more efficiently is therefore becoming increasingly valuable.
This has helped Pro Medicus win a string of major contracts in the US, and I think there is plenty more market share available to take.
I also like the economics of the business. Once another customer comes onto Visage, Pro Medicus doesn't need to build factories or hire thousands of employees to support the extra revenue.
That scalability means continued market share gains could translate into very strong profit growth over the long term.
WiseTech Global Ltd (ASX: WTC)
A final ASX share with the potential to compound for many years is WiseTech Global.
Its CargoWise platform helps freight forwarders and logistics companies manage everything from customs and warehousing to shipping, documentation, and compliance.
Global logistics is complicated, which works in WiseTech's favour. Large customers can build CargoWise deep into their operations, and once that happens, replacing it isn't necessarily a simple exercise. This gives WiseTech an opportunity to grow alongside its customers and gradually provide them with more functionality through the same platform.
The company has also spent heavily on expanding what CargoWise can do, both through internal development and acquisitions.
Governance concerns are worth highlighting, because poor governance can ultimately undermine even a very good business.
But if WiseTech can put those issues behind it and CargoWise continues becoming an increasingly important part of global logistics, I think the company could have a lot more growth ahead of it.
