The two ASX share ideas in this article look like they have lots of growth potential, in my opinion.
We all know about the large growth companies that have grown significantly such as Microsoft, Alphabet, Xero Ltd (ASX: XRO) and REA Group Ltd (ASX: REA). But, they come with a high price.
I’m going to talk about two ASX share options that could achieve strong capital growth in the years ahead.
Airtasker Ltd (ASX: ART)
Airtasker says it’s Australia’s leading online marketplace for local services, connecting people and businesses who need work done with people who want to work.
I think there’s a growing trend of people willing to buy products and services online, which is a useful tailwind of digital adoption. The longer Airtasker is around, the more legitimate the marketplace platform will be for potential customers.
With a digital model, the business is able to earn very high gross profit margins of well over 90%. Additional revenue is very beneficial for generating more profit, even though it’s investing for growth in Australia, the UK and the US.
The FY24 third quarter saw marketplace revenue grow by 11.5% to $10.1 million, following 49.1% growth of UK posted tasks amid its partnership with Channel 4 in the UK.
For that quarter, it made positive total EBITDA of $0.6 million, an improvement of $1.5 million year on year. It also generated positive free cashflow, while operating cashflow increased $4.3 million to $3.1 million. The UK spring and summer period should be the company’s “biggest quarter”.
From here, I think Airtasker can either see rapid improvement in cashflow, or significantly lift its spending on growth initiates, which could be a big boost for the ASX share over the long-term.
VanEck Morningstar Wide Moat AUD ETF (ASX: MOAT)
This exchange-traded fund (ETF) invests in US businesses that are expected to have durable competitive advantages for the next decade or two.
Competitive advantages can come in many different forms including patents, brand power, cost advantages, network effects and so on.
The MOAT ETF has a management fee of 0nly 0.49% per year, which I think is very cheap considering what it does and how well it has performed.
From a list of high-quality businesses, the MOAT ETF only invests in businesses that are at a good value compared to what the Morningstar analysts think the stock is actually worth.
Over the past three years, the VanEck Morningstar Wide Moat AUD ETF has returned an average of 15.9% per year. I don’t know what future returns will be, but I think it can outperform the ASX.
