Most of the attention and headlines are focused on the large blue chips. In my experience, real wealth, the wealth that lasts a lifetime, comes from well-selected mid-cap shares. Shares with a lot of growth still in them. Investors in Amazon.com, Inc. (NASDAQ: AMZN) made more if they bought in 2012 than if they bought in 2018. 

This is, of course, fraught with danger. Mid-caps are inherently more volatile. They rise and fall quickly. The dynamics of a growth share also make them very hard to value.

Real wealth builders

The fintech sector has come out of nowhere with companies like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) dominating the sector. Nevertheless, there is a collection of 4 roaring mid-caps that have also exploded into the scene over the past 4 years.

Of these, I like Zip Co Ltd (ASX: Z1P). The Zip Co share price grew by 69.9% over May alone. The company has a market cap of $1.46 billion. This makes it a little more than 8 times the size of its buy-now-pay-later rival, Afterpay. Like most growth shares, Zip Co has negative earnings. But it has an average annual sales growth of 71.6%. In my view, this company clearly has a long way to grow and has a deeper consumer credit offering than others in the sector. 

I think Kogan.com Ltd (ASX: KGN) is another of the real wealth-building shares on the ASX today. In the few years since its initial public offering, the company has delivered some really outstanding results. In May the Kogan share price rose by 44.34%.

The company’s share price is currently trading at a price to earnings ratio (P/E) of 57.91. This is way above its P/E 3-year average. Still, I think the market has got it right. Kogan is a growth share. It is founder-led and I believe it will flourish should Amazon ever really ramp up in Australia. 

The Reliance Worldwide Corporation Ltd (ASX: RWC) share price has leapt 21% during May. I think this is another great company for building real wealth.  Reliance manufactures and sells fittings and technological solutions in the plumbing space. It has brands and branches in the UK, the USA and Australia. This provides access to the mighty US residential housing market. Interestingly, over the past 4 years since its initial public offering, the company has achieved an average 46.5% growth in annual sales. 

More reading

• Afterpay share price rockets 50% in May, is it in the buy zone?
• Why these 3 ASX 200 blue chips could be set for growth this week
• Why these ASX retail shares surged over 25% in the past 2 weeks
• 5 ASX 200 winners and 3 losers from last week
• ASX investors brace to ride the next wave of “irrational exuberance”

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited and ZIPCOLTD FPO and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Amazon and Reliance Worldwide Limited. 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.

The post Real wealth from 3 roaring mid caps in May appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) had an amazing month in May, rising more than 9% for the month. So much for ‘sell in May and go away’.

But as we start a new month and a new season, I think it’s still a time to be very cautious as we climb ever further from the lows we saw ASX 200 shares hit in March.

So here are 3 things that I think we should all look out for this June on the share market.

1) The spread of the coronavirus

Of course, this is the primary concern for all investors, as well as all Australians. The share market has been rallying in recent weeks mostly due to the fact that economic restrictions are being lifted in this country as a result of our collective effort to keep the number of coronavirus cases at a minimum.

We have seen just this week that (according to reporting from the Sydney Morning Herald) South Korea has had to re-tighten restrictions after an uptick in coronavirus cases. If this were to occur in Australia (fingers crossed it doesn’t come to this), it would be bad news for ASX shares.

2) Government assistance

As Reserve Bank of Australia governor Philip Lowe pointed out last week, the damage that the coronavirus has done to our economy hasn’t been as nasty as we all first feared.

Despite this, Dr Lowe also made comments suggesting that government assistance such as the JobKeeper program might have to be expended in order to further insulate the economy. If the government chooses not to go down this path, I think it would be detrimental for the whole economy, and by extension the share market. As such, I think it’s well worth keeping an eye on this space in June.

3) The almighty USA

We don’t like to admit it here in Australia, but the direction of most share markets around the world (including the ASX) is really determined by what’s happening over in the good ol’ United States of America. As the old saying goes, if America sneezes, the rest of the world catches a cold.

Right now, the US government is pumping an extraordinary level of monetary stimulus into the US share markets, which is partly to thank for their (and our) bountiful 2 months of gains since March.

But if things were to go south Stateside, I fear the effects would spill over to our own ASX. Thus, the US is definitely worth watching as we journey into June.

More reading

• ASX 200 up 0.6%: NAB charges higher, ACCC investigates Qantas acquisition
• Afterpay share price rockets 50% in May, is it in the buy zone?
• 3 best stocks for ASX 200 investors in retirement to buy now
• Why these 3 ASX 200 blue chips could be set for growth this week
• Why the price of these ASX travel shares soared over 30% since mid-May

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

The post 3 things that could impact ASX 200 shares this June appeared first on Motley Fool Australia.

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