If you’re looking for strong returns over the next decade, but small caps are too risky for your tastes, then you might want to take a look at the mid cap space.
This is because mid cap shares traditionally carry less risk than small caps but offer stronger potential returns than large caps.
With that in mind, I have picked out two top mid cap ASX shares which are highly rated:
Adore Beauty Group Limited (ASX: ABY)
Adore Beauty is a leading online retailer of beauty and personal care products. At the last count, the company had over 590,000 Active Customers across the ANZ region and was expecting to generate first half revenue of approximately $95.2 million from them. This is almost double what it achieved in the prior corresponding period.
Even if you annualise the figure to ~$180 million, this is still only a very small slice of an ANZ beauty and personal care products market that was worth $10.9 billion in 2019. This gives Adore Beauty a significant runway for growth in the 2020s.
One broker that likes what it sees here is Morgan Stanley. Earlier this month it put an overweight rating and $8.35 price target on the company’s shares. This compares to the current Adore Beauty share price of $5.20.
Collins Foods Ltd (ASX: CKF)
Another ASX mid cap share to look at is Collins Foods. It is a major KFC franchisee in Australia and Europe and a Taco Bell franchisee in Australia. At present, Collins Foods operates 243 KFC restaurants across Australia and 41 restaurants across Germany and the Netherlands.
It has been a strong performer in 2020 and recently revealed an 11.3% increase in half year revenue to $499.6 million. Things were even better on the bottom line, with the company reporting a 15.1% jumped in underlying net profit after tax to $27.5 million.
Analysts at UBS were impressed with this result, which smashed their estimates. The broker also appears confident that a number of favourable trends will keep this positive form going. In light of this, it put a buy rating and $11.65 price target on the company’s shares. This compares to the latest Collins Foods share price of $10.13.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
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Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia has recommended Collins Foods Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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