This 1 factor is a big reason why some ASX shares make HUGE returns

The factor I talk about in this article could be the biggest reason why some ASX shares like Altium Limited (ASX:ALU) make huge returns.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are many different factors that investors point to as things to look for in shares.

A net cash position can be very useful. A high gross profit margin or earnings before interest, tax, depreciation and amortisation (EBITDA) margin helps grow profit quickly. A high return on equity (ROE) may be the most attractive statistic of all.

But there are plenty of shares that have one or more good features which don't always turn out well.

There are a number of ASX shares that have produced great returns over the past decade like CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG), Afterpay Touch Group Ltd (ASX: APT), Premier Investments Limited (ASX: PMV), Breville Group Ltd (ASX: BRG), Xero Limited (ASX: XRO), Altium Limited (ASX: ALU) and Webjet Limited (ASX: WEB).

They all operate very different businesses but they all have one thing in common: international growth.

Australia is a very wealthy country and businesses can do well by just operating here (and perhaps in New Zealand), they can certainly grow large – just look at Commonwealth Bank of Australia (ASX: CBA) and Woolworths Group Ltd (ASX: WOW).  

But when you open up your total addressable market to other countries like China, the US or a whole region like Europe, a business can really accelerate its growth. Xero going into the UK has really ramped things up. Afterpay's expansion in the US has sent its potential gross merchandise volume (GMV) targets multiply. Webjet's WebBeds international earnings has opened up large markets for the travel operator.

Foolish takeaway

If you want to find a share that's likely to produce market-beating returns, I think it's much more likely to be a business that's expanding overseas. At the current prices I think it's shares like Webjet and A2 Milk Company Ltd (ASX: A2M) that could be the best value in the ASX 200 today.

Tristan Harrison owns shares of Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Premier Investments Limited. The Motley Fool Australia owns shares of A2 Milk, Altium, and Xero. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

A fresh-faced young woman holds an Australian flag aloft above her head as she smiles widely on a beach as though celebrating a national day or event where Australia has been successful.
Growth Shares

The best Australian shares to buy with $1,000 right now 

Analysts think these shares could be great options for Aussie investors when the market reopens.

Read more »

A young man goes over his finances and investment portfolio at home.
Growth Shares

Why earning 4% to 5% in a term deposit 'isn't that attractive'

The upside is capped on the most risk-less investments.

Read more »

A woman makes the task of vacuuming fun, leaping while she pretends it is an air guitar.
Growth Shares

Overinvested in WiseTech shares? Here are two alternative ASX growth stocks

WiseTech shares are great, but there are other exciting growth stocks out there.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Growth Shares

These ASX 200 growth shares could rise 65% and 100%

Big returns could be on offer for buyers of these shares according to analysts.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Growth Shares

Is this growing ASX 300 stock a top buy?

Let's see what analysts are saying about this high flying company.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Growth Shares

3 excellent ASX growth shares to buy for market-beating returns

Let's see why analysts are feeling bullish about these growing companies.

Read more »

A man and woman sit next to each other looking at each other and feeling excited and surprised after reading good news about their shares on a laptop.
Growth Shares

4 ASX shares to buy now and hold for a lifetime in your super fund

Analysts have very good things to say about these stocks.

Read more »

Man smiling at a laptop because of a rising share price.
Investing Strategies

This fund manager delivered 42% gains in one year. Here are the top ASX shares it owns

Growth funds continue to deliver the goods for ASX investors.

Read more »