Audinate

Nov 16, 2023

A trailblazer in its field, this Sydney ASX company has only just started its potentially lucrative journey. Latest posts by Tony Yoo ( see all ) Image source: Getty Images 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 Tesla Inc ( NASDAQ: TSLA ) is now a household name for electric cars and high-power batteries, but it wasn't always that way. Back in the middle of 2010 when its shares listed on the NASDAQ, hardly anyone outside of niche motoring enthusiasts knew the name. For those investors savvy enough to buy Tesla shares at its initial public offering (IPO) , the punt has paid off handsomely. In fact, they would be living a life of luxury somewhere right now. Tesla shares were sold at the IPO for US$17. After taking into account two stock splits , that's the equivalent of US$1.13 in today's terms. So a $10,000 investment back then would now be worth a cool US$2.15 million. As you can see from that example, identifying excellent companies early in their life and sticking with it for years while it executes its plan can be very rewarding. So are there any ASX stocks currently capable of similar growth? Certainly. Of course, no one knows what the future holds. But by carefully studying the company's moat and how large its potential market could be, investors can take some educated guesses. Like Bluetooth, but with an 'unregulated monopoly' Let's take Audinate Group Ltd ( ASX: AD8 ) as an example. The Sydney company makes digital audio networking technologies. Its flagship product, Dante, is a networking protocol that allows big events like concerts to be held over digital cables. "You can liken it to Bluetooth, if you like. Except Bluetooth isn't as good a technology and it's owned by a cooperative," he said. "In many ways, we believe this Dante product by Audinate has the potential to be an unregulated monopoly." For Audinate, Dante is very scalable. It doesn't need to produce goods itself per se for revenue to be flowing in because the Dante protocol is licenced out to audio equipment and musical instrument manufacturers. Similar to Tesla, it's a trailblazer of its technology. This early mover advantage has seen it now with 12 times the market adoption rate of the nearest competitor, according to Audinate's AGM presentation last month. Already turned $10,000 into $114,000 The stock has already had an excellent first six years on the ASX. After selling shares at $1.22 at its IPO, it now trades at around the $14 mark. This means that a $10,000 parcel bought just before the float would now be worth $114,754. But importantly, Audinate shares have plenty of further potential. According to the latest calculations, Audinate's total addressable market is US$2 billion, of which it currently has 9%. Again, there is plenty of the journey to go before it can become Australia's Tesla. But it's definitely set up for that opportunity. Aside from Wayne, Audinate has plenty of other fans in the professional investment community. According to CMC Markets, five out of six analysts that cover the stock currently believe it's a buy. Motley Fool contributor Tony Yoo has positions in Audinate Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Audinate Group and Tesla. The Motley Fool Australia has positions in and has recommended Audinate Group. 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