If you’re looking for some quality additions to your portfolio this month, then the two ASX shares listed below could be worth considering.
They have been tipped as shares that could generate strong returns for investors in the future. Here’s why they are rated very highly:
NEXTDC Ltd (ASX: NXT)
NEXTDC is Australia’s leading data centre operator with a total of nine centres located across Australia. It has also recently opened up offices in Singapore and Tokyo and is looking to expand into these markets in the near future.
This could be a great move by NEXTDC given the size of these markets. If it is able to replicate its success in the Australian market, then it would have a very long runway for growth. It could also be a steppingstone into other markets in the future.
For now, though, the company is generating strong earnings growth in the local market and appears well-placed to continue doing so in the future thanks to the seismic shift to the cloud. With more infrastructure moving to the cloud and increasing amounts of data being generated by businesses and consumers, demand for data centre capacity is expected to grow materially over the 2020s and beyond.
Goldman Sachs is a big fan of the company and believes it is well-positioned to continue its strong growth for some time to come. As a result, it recently put a conviction buy rating and $15.00 price target on its shares.
Xero Limited (ASX: XRO)
Another highly rated ASX 200 share to consider buying is Xero. It is a fast-growing provider of a cloud-based business and accounting solution to small and medium sized businesses.
Xero’s rapid growth in recent years has been driven by the aforementioned shift to the cloud, its global expansion, and a series of bolt-on acquisitions.
Positively, these acquisitions are continuing, with a couple being made recently (Planday and Tickstar) that strengthen its app ecosystem meaningfully.
This is a bigger deal than you might think, as Goldman Sachs believes the monetisation of this app ecosystem could be the key to multi-decade strong revenue growth.
The broker currently has a buy rating and $153.00 price target on Xero’s shares.
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 February 15th 2021
More reading
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- 2 of the best ASX 200 blue chip shares to buy
James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. 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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