I am always trying to find the best ASX share opportunities for long-term success. Businesses that have good growth potential could ones to watch.
There has been more volatility in recent weeks, opening up some opportunities to take advantage of.
If I had $5,000 to invest, then I’d pick these two ASX shares:
Temple & Webster Group Ltd (ASX: TPW)
I think that Temple & Webster is one of the most promising businesses that is worth around $1 billion.
The furniture and homewares market in Australia is a huge addressable segment for this ASX share. In 2020 it was worth around $16 billion, though online only accounted for between $1.1 billion to $1.4 billion.
Of Temple & Webster’s sales, around 74% is through a drop ship model where suppliers ship products directly to customers, meaning no inventory risk. The other 26% is private label, which typically comes with higher margins.
The Temple & Webster model is asset light, with negative working capital. It can leverage third party warehouses and carrier networks. The average time to dispatch is just 1.9 days.
Temple & Webster’s scale is increasing operating leverage, enabling significant re-investment. It’s seeing growth in all categories, geographies, channels and demographics. FY21 revenue was up 85% and up another 56% in the period from 1 July 2021 to 15 October 2021 in FY22
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I think that this is a very promising ASX share, particularly with all of its investing in technology and the online shopping tailwind.
Volpara Health Technologies Ltd (ASX: VHT)
I think this is one of the most promising ASX healthcare shares. Yet, despite reaching the highest level of annualised recurring revenue (ARR) to date, the Volpara share price has fallen 30% over the past year.
Sadly, nearly 700,000 people die from breast cancer each year according to the company. Volpara also says that breast cancer screening presents a US$750 million annual recurring opportunity. Around 92 million women are screened globally each year, with 39 million in the US.
Volpara’s integrated platform will sell for up to US$10 per screening, which is the target average revenue per user (ARPU). About 50% of its installed customer base was originally signed onto capital contracts with very low paying recurring maintenance agreements. This is a promising area for growth.
In the quarter ending September, the average ARPU for new deals was US$2.04. It’s doing a number of things to try to increase its ARPU over time including upselling existing customers with more products, increasing the offering with risk analytics and signing new deals which start with higher ARPU.
In the US, it has a market share of around 33% of women. There is also a strong private uptake in Australia and New Zealand, with the first major public screening programs due to go live in Australia with analytics.
