The ASX share market is one of many markets to have seen significant volatility this year. For me, more volatility brings more opportunity.
I don’t know how high interest rates will go, nor when inflation will calm down. But, I do believe that the lower share prices that we’re seeing can help long-term returns because we can buy at better value today.
Past growth does not mean that the future will match that. Returns can sometimes be bumpy.
However, the ASX share market has delivered an average return per annum of approximately 10% over the decades, although who knows what the next decade will bring. If an ASX share were to grow by an average of 10% per year, it would take less than eight years for me to double my money.
I believe the following three potential investments could be pleasing growth contenders to double my money in the coming years.
Betashares Global Cybersecurity ETF (ASX: HACK)
It’s a mix of global giants and smaller but growing players.
Readers may have heard of some of the international positions in the portfolio, such as Cisco Systems, Broadcom, Infosys, Palo Alto Networks, Crowdstrike, Fortinet, Verisign and Okta.
As BetaShares says, “With cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.”
Just look at two of the most recent high-profile examples of cybersecurity breaches in Australia, for Medibank Private Limited (ASX: MPL) and Optus. I think it is — and will continue to be — essential for organizations to pay for good cybersecurity systems.
According to BetaShares sources, the global cybersecurity sector was US$223.7 billion in 2022, and it’s expected to grow to US$478.7 billion in 2030. That would be a rise of 114%.
I’d put $10,000 into this ETF.
TechnologyOne Ltd (ASX: TNE)
The key focus of this tech company is to provide a global software as a service (SaaS) enterprise resource planning (ERP) solution. The idea is that customers can do everything through its software – asset management, human resources, payroll, supply chain management, business analytics and so on.
TechnologyOne revealed in its FY22 first-half results that its customer retention rate was higher than 99%, and more than 90% of its revenue was now recurring. Its net revenue retention rate in HY22 was 114% — that means existing customers paid 14% more revenue to the ASX share than they did before.
Management said this represented a “significant opportunity” in its existing customer base, adding it would “continue to double in size every five years”.
That’s certainly not guaranteed.
However, the company’s growing revenue and improving profit margins are compelling, in my opinion.
Total annual recurring revenue (ARR) was $288 million in the first half of FY22 – it’s expected to grow to at least $500 million in FY26. Additionally, TechnologyOne expects good growth in the United Kingdom, which could be a sizeable growth market for the company if successful.
The company’s profit before tax margin is expected to rise from 31% to 35% in the “coming years”.
I’d invest $5,000 into TechnologyOne shares.
Adairs is a growing retailer of homewares and furniture through three different businesses – Adairs, Mocka and Focus on Furniture.
The business has seen a massive drop this year, and the Adairs share price is down by 44% in the year to date. Simply getting back to the price it commanded at the start of the year would require a rise of more than 80%.
Having said that, I think the company has a good shot of achieving long-term growth.
Adairs plans to grow its product range across the three businesses, which can help it increase its market share. New and upsized stores can help – there is a link between sales and floor space, and Adairs intends to grow its in-store floor space by at least 5% per annum over the next five years.
The retailer is also building its membership, which in turn will help sales. Each member spends around $400 per year, according to Adairs.
With the newly acquired business, Focus, it wants to roll out at least 30 new stores nationally. The company also plans to continue improving its online offer to boost e-commerce sales.
Finally, Adairs wants to grow its total sales from $564.6 million in FY22 to more than $1 billion over five years.
I’d invest the final $5,000 into Adairs.