I think there are some ASX shares that look unstoppable. They could be worth holding for the next decade.
The next 12 months of share price movements is unpredictable. The next week is unpredictable. But when you give yourself and the business a long time, the ASX share could produce enormous growth.
Sometimes it just takes time for a growth share to grow into its valuation. When Facebook listed some investors thought it was expensive. Maybe it was. But now the share price is close to US$300.
A business like CSL Limited (ASX: CSL) has regularly been called expensive. It's gone up a lot over the past five years.
With growth shares it's important to think about where the profit will be in five years, not just in one year from now.
Businesses growing strongly now could keep rapidly growing revenue and profit. Today's prices could seem very cheap in a decade from now.
I think these unstoppable ASX shares could be long-term buys:
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster has been one of the best-performing ASX shares since the COVID-19 crash. Since 23 March 2020 the Temple & Webster share price has gone up 496%.
I think the rise is largely justified. As an online retailer it is well positioned to help households buy furniture and homewares during the shift to online shopping.
The company was growing well before COVID-19, but the last six months of FY20 saw very strong trading.
In FY20 full year revenue was up 74% to $176.3 million, with the fourth quarter revenue rose by 130%. The business was cashflow positive and it grew earnings before interest, tax, depreciation and amortisation (EBITDA) by 467% to $8.5 million. Excluding an income tax benefit of $5.9 million, it also generated a net profit after tax (NPAT) of $6 million.
I think the ASX share is very scalable. Over the next decade it has a long growth runway. In FY21 to 27 August 2020 the company had seen year on year revenue growth of 161% with an EBITDA contribution of around $6 million for just two months.
At the current Temple & Webster share price it's trading at 45x FY22's estimated earnings.
City Chic Collective Ltd (ASX: CCX)
The plus-size women's apparel, accessories and footwear retailer is doing a really good job of expanding its presence overseas.
In FY20 it reported that 42% of its global sales were in the northern hemisphere, up from 20% in FY19. FY20 saw sales revenue growth of 31% to $194.5 million.
I'm bullish about City Chic's long-term prospects because of its global growth plans and its expanding online presence. In FY20 alone it saw online website growth of 113.5% compared to FY19. In FY20 online sales made up 65% of total sales, up from 44% in FY19.
The ASX share has a good chance of becoming a large player in the US after making a few acquisitions of financially distressed competitors. Catherines is the latest business that City Chic is looking to buy and turn into an online-only business. The US is a huge market and online fulfilment should have higher profit margins than having a national store network.
At the current City Chic share price it's trading at 22x FY22's estimated earnings.
Kogan.com Ltd (ASX: KGN)
Kogan.com is another business that has performed exceptionally well since the big crash. From 16 March 2020 to today, the Kogan.com share price has risen by 409%.
It's another online business which has seen a massive increase in spending during this COVID-19 period. Not only does it sell a wide variety of retail products, but it also offers other services like insurance, superannuation and telecommunications.
In FY20, gross sales went up 39.3% to $768.9 million, gross profit rose 39.6% to $126.5 million, adjusted EBITDA climbed 57.6% to $49.7 million and NPAT grew 55.9% to $26.8 million. The second half of FY20 saw adjusted EBITDA grow by 74.1%.
July 2020 was an incredible month for the ecommerce ASX share – gross sales increased by 110%, gross profit grew 160% and Kogan.com generated more than $10 million of adjusted EBITDA.
If Kogan.com can convince more of its growing customer base to sign up to be members and use other services then its profit margins could steadily climb.
At the current Kogan.com share price it's trading at 40x FY22's estimated earnings after Friday's decline.
Foolish takeaway
I think all three of these ASX shares look like they could be good buys today for their long-term growth potential. Low interest rates justify some of the higher prices we're seeing. Kogan.com has the potential to become a much larger business if it can convert more of its retail customers to its other services. However, I'd be happy to buy all three at the current prices for the long-term.
