The Australian share market is home to a large number of mid cap shares. The good thing about this is that mid caps generally carry less risk than small caps, but stronger potential returns than large caps.
This arguably makes it one of the best areas for investors to look for market beating returns over the next decade. But which mid cap shares should you buy?
Three that I would buy with $3,000 are listed below. Here’s why I rate them:
Bubs Australia Ltd (ASX: BUB)
Bubs is an infant formula and baby food company which has been growing at a very strong rate over the last few years. And thanks to some recent supply agreements with Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW), it looks well-placed to continue this trend. While previously it was running loss-making operations, it recently revealed positive quarterly operating cashflows. I’m optimistic this means the company has now reached a scale which will make its operations more and more profitable in the coming years. As a result, I think it could be a good long term option for investors.
Opthea Ltd (ASX: OPT)
Opthea is a developer of novel biologic therapies for the treatment of eye diseases. The key attraction to the company for me is the OPT-302 combination therapy. Last year Opthea delivered very strong Phase 2b study results. If its Phase 3 trial proves just as successful, then the future could be very bright for the company. The current standard of care treatments for wet age-related macular degeneration and diabetic macular edema had sales of over US$3.7 billion and US$6.2 billion in 2018. Another positive is that Opthea has a very strong balance sheet and appears well-funded to see OPT-302 through its trials.
Pushpay Holdings Group Ltd (ASX: PPH)
Pushpay is a fast-growing donor management platform provider for the faith, not-for-profit, and education sectors. Due to the quality of its product, Pushpay has been growing its share of the U.S. market at a rapid rate in recent years. This has led to the company’s recurring revenues increasing very strongly. The good news is that it still has a long runway for growth. Last week it revealed that it is targeting 50% of the medium to large church market. This represents a US$1 billion opportunity, which is many multiples what it achieved in FY 2020.
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Returns as of 7/4/2020
More reading
- ASX shares I’d invest $10,000 into today
- How to build good wealth with small investments
- Is it time to buy ASX small caps for your portfolio?
- The Pushpay share price is up 70% in 2020: Why I would still invest
- 3 ASX growth shares to buy immediately with $3,000
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended BUBS AUST FPO. 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.
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