These two ASX shares have strong outlooks this decade. Here’s why…
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There are a handful of ASX shares that I think would make excellent buys to hold for the long term.
Companies with long-term growth plans and large potential markets can generally produce good compound returns over the coming years, in my opinion.
I believe those elements together with recent share price volatility make the two ASX shares below even more attractive. Let’s take a closer look.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is an ASX healthcare share that has seen a hefty decline since the beginning of the year, but its FY22 result showed a lot of progress.
The company points out that breast cancer screening presents a “significant opportunity” for the business. There are 92 million women screened globally each year, with 39 million in the United States. Volpara has reached a market share of 35.5% of US women having a Volpara product used on their images and data, compared to 32% in FY21.
There are plenty of other metrics that make this company a great long-term investment, in my opinion. Its average revenue per user (ARPU) continues to climb. ARPU was US$1.40 in FY21 and grew to US$1.51 in FY22. Growth here can be achieved by selling more modules to more clients.
Volpara’s subscription revenue rose by 37% year on year to NZ$24.8 million over the year. It came with a gross profit margin of 91%, which allows the business to invest that growth profit into growth areas of the business growth such as marketing and research and development.
One focus for the ASX share in FY23 is to expand its total addressable market, which could help lengthen the company’s long-term growth runway.
Bailador Technology Investments Ltd (ASX: BTI)
Bailador describes itself as a growth capital fund that is focused on the IT sector, actively managed by “an experienced team with demonstrated sector experience.”
It aims to provide exposure to a portfolio of IT companies that have global addressable markets. Bailador invests in private technology companies at the expansion stage.
Typically, it’s looking for businesses that are run by the founders, have been in operation for two to six years, have a proven business model with attractive unit economics, international revenue generation, a huge market opportunity and the ability to generate repeat revenue.
Some of the types of areas the ASX share likes to look at include subscription-based internet businesses, online marketplaces, software, e-commerce, high-value data, online education, telecommunication appliances and services.
I think it could be a good opportunity because of the long-term investment approach it takes with its holdings, which themselves are attractive long-term businesses.
At the end of April 2022, it had net tangible assets (NTA) per share (pre-tax) of $1.99. The current Bailador share price of $1.36 at Friday’s close is at an attractive discount to that NTA level.
These factors are why I think the underlying portfolio is likely to continue to perform well over the coming years, particularly starting at this lower valuation of the Bailador share price.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments Limited and VOLPARA FPO NZ. The Motley Fool Australia has positions in and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Bailador Technology Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.