In the mid cap side of the Australian share market, I believe there are a number of shares that have the potential to become much larger companies in the future.

Two mid cap shares that tick a lot of boxes for me are listed below. Here’s why I think they could grow significantly over the next decade:

Kogan.com Ltd (ASX: KGN)

I think that this ecommerce company could be a great long-term investment. Over the last few years it has been benefiting greatly from the structural change that is happening in the retail industry. Pleasingly for the company and its shareholders, this change has been accelerated by the pandemic. In fact, Adobe estimates that the pandemic has accelerated ecommerce growth by 4 to 6 years. This looks set to underpin exceptionally strong earnings growth for Kogan in FY 2020 and FY 2021. Which could yet be boosted further inorganically. Last month the company announced a $115 million capital raising (which was later revised to $120 million). It intends to use the funds to acquire businesses that will add value and drive further growth.

Megaport Ltd (ASX: MP1)

Another exciting tech share to look at is Megaport. It is a provider of elastic interconnection services across data centres globally. This service allows its users to increase and decrease their available bandwidth in response to their own demand requirements. The benefit of this is that it means they don’t need to be tied to fixed service levels on long-term and expensive contracts. Instead, they can just use what they need, when they need it. Thanks to the quality of its service and the cloud computing boom, demand for its services has been growing very strongly and has driven further strong revenue growth in FY 2020. Pleasingly, with the migration to the cloud expected to accelerate because of the pandemic, Megaport appears well-placed to continue its growth for many years to come.

More reading

• Why Kogan, Netwealth, Silver Lake, & Zip Co shares are storming higher
• A surprise ASX share that’s doubled since March
• Why the Kogan share price soared 38% in June
• Kogan share price hits record high after upsizing share purchase plan
• Why Coles, Kogan, Northern Star, & Splitit are charging higher

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 Kogan.com ltd and MEGAPORT FPO. The Motley Fool Australia has recommended Kogan.com ltd and MEGAPORT 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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If you are looking to build on your share portfolio this month, I believe that Vocus Group Ltd (ASX: VOC) and Nearmap Ltd (ASX: NEA) are two ASX shares that are well worth considering.

Here’s why both these companies are in my buy zone right now:

Vocus

Local Australian telco, Vocus specialises in providing fibre and networking solutions. Its services also include fixed broadband, data centre services and Unified Communications. Vocus has a small presence in the residential sector for fixed broadband. However, it mainly targets the enterprise, government, wholesale and small business markets.

Vocus’ retail division has struggled in recent years due to the tight margins associated with wholesaling fixed broadband services under Australia’s National Broadband Network. However, I believe a three-year turnaround strategy is positioning Vocus well for solid, long-term growth. The telco is now beyond the mid-point of this growth strategy.

Last month, Vocus reiterated its FY 2020 guidance with EBITDA anticipated to be in the range of $359 million to $369 million. On another positive note, the company anticipates that its core Network Services business will see EBITDA growth of 10% during FY 2020.

Vocus is also well positioned to capitalise on the rollout of 5G services over the next few years. This is due to its market position as a specialist fibre and network services provider. This, I believe, will further strengthen Vocus’ growth potential over the next few years.

The Vocus share price has risen more than 60% from its March low and is currently trading at $2.96. This is still considerably less than its pre-pandemic high of $3.86.

Nearmap

Another company I think could make a good addition to your ASX share portfolio this month is Nearmap.

Nearmap is an Australian aerial imagery and specialist location data company. It provides geospatial map technology for enterprise and government customers across Australia, New Zealand, the United States, and Canada. It has been growing strongly over the past few years, especially in the US market.

Nearmap’s customer base, in particular, continues to climb higher. This ASX tech share is now anticipating closing FY 2020 with an actual cash value (ACV) portfolio of between $103 – $107 million, on a constant currency basis. Customer churn for Nearmap is now below 10% on a 12-month rolling basis. This is a pleasing reduction from the 11.5% that it reported at the end of 2019.

I believe there is strong growth potential for Nearmap over the next three to five years, especially in the massive US market.

This growth will be assisted by the recent launch its new artificial intelligence (AI) product, which targets a range of industries including insurance, utility and local government. The Nearmap share price is currently trading at $2.37 which is 175% up from its March low but well below the highs of over $3 seen last year. 

More reading

• Brokers name 3 ASX 200 shares to buy today
• 2 five-star ASX shares for strong long-term growth
• These were the 5 best performing ASX shares last week
• ASX 200 Weekly Wrap: Afterpay, Tech push ASX 200 back above 6,000
• These are 10 most shorted shares on the ASX

Phil Harpur owns shares of Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. 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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If you’re not happy with the interest rates on offer with savings accounts and term deposits, then you might want to consider buying one of the dividend shares listed below.

I estimate that these dividend shares offer FY 2021 yields that are among the most generous on the market. Here’s why I like them:

Commonwealth Bank of Australia (ASX: CBA)

If you don’t have meaningful exposure to the banking sector, then I think it would be well worth considering an investment in Commonwealth Bank. Especially given how the banking giant’s shares are trading 22% lower than their 52-week high. While a decline in the CBA share price is certainly not unwarranted, I believe the extent of its decline has been overdone and feel confident that the coronavirus provisions it has made are more than sufficient.

In light of this, while I expect a dividend cut in FY 2021, I don’t believe the cut will be as severe as some expect. I forecast a fully franked dividend in the region of $3.70 per share next year. This would be a generous 5.2% dividend yield based on the current Commonwealth Bank share price.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Another high yield ASX dividend share to consider buying is Sydney Airport. While I wouldn’t necessarily expect a final dividend from the airport operator in the second half of FY 2020, I’m optimistic that the domestic travel market will have recovered enough in 2021 to support a decent dividend payment. Just as long as the situation in Victoria doesn’t escalate and spread into other states.

At present, I estimate that Sydney Airport will pay a dividend in the region of 29 cents per unit next year. Which, based on the latest Sydney Airport share price, represents a 5.4% FY 2021 dividend yield.

More reading

• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• The hidden risk to early superannuation withdrawal that no one told you about
• The embattled ASX 200 stocks that could deliver a dividend surprise
• Why Sydney Airport and 2 other ASX shares could surprise this reporting season
• The CBA share price is up 30% since March

Motley Fool contributor James Mickleboro 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.

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The Cimic Group Ltd (ASX: CIM) share price has seen little reaction to the announcement of a $2.5 billion mining services contract win, dipping 1.22% to $22.70 per share at the time of writing.

Cimic’s global mining services provider, Thiess, was awarded a 5-year contract extension to continue to provide mining services at the Lake Vermont Coal Mine in Queensland. This will generate $2.5 billion in revenue for Thiess and continues its full-service mining operations including mine planning, coal mining, topsoil and overburden removal, drill and blast, water management and rehabilitation of final landforms. 

What does Cimic do? 

Cimic is in the construction, mining, services, and public private partnerships industries. It works across the lifecycle of assets, infrastructure, and resources projects. The group includes a construction business and mining and mineral processing companies Thiess and Sedgman. It also includes the public private partnerships arm and services specialist, with all divisions supported by an in-house engineering consultancy. 

How has the Cimic share price been performing? 

The Cimic share price took a beating in the March downturn, falling nearly 60% from a February high of $30.93 to just $13. The price bounced back quickly however, and has traded in the range of $22–$28 since April. Last month, Moody’s affirmed the company’s strong investment grade credit rating of Baa2, with a stable outlook. 

Cimic reported a marginal decrease in revenue in the first quarter of 2020, with revenue of $3.3 billion compared to $3.4 billion in 1Q19. It earned net profits of $166 million and reported a gross cash position of $4.5 billion. Cimic was awarded $2.5 billion of new work during the quarter and had work in hand of $36.1 billion. This is equivalent to more than two years’ worth of work and provides strong visibility. 

What is Cimic’s outlook? 

Cimic’s outlook has remained positive in the face of COVID-19. In a market announcement in May, executive chair Marcelino Fernandez Verdes stated:

Our priorities at this time are the continued provision of essential services and critical infrastructure for the communities where we operate. We have kept our projects going and working productively to help support the economy at a time when it’s very much needed.

Looking ahead, governments have announced they will accelerate major social, transport, and infrastructure projects to create jobs and stimulate economic growth. Cimic is in a position to support this demand for critical infrastructure and create long-term value, which could have some impact the Cimic share price moving forward.

More reading

• The Openpay share price is surging today. Is it the next Afterpay?
• 2 exciting ASX tech shares with enormous potential
• Vocus and 1 other ASX share to buy in July
• Why I would buy CBA and this high yield ASX dividend share
• The Treasury Wine share price and this ASX 200 stock are the latest to be hit by broker downgrades today

Motley Fool contributor Kate O’Brien 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.

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The S&P/ASX 200 Index (Index:^AXJO) lost ground in after lunch trade today but the Treasury Wine Estates Ltd (ASX: TWE) share price is hit harder.

The top 200 benchmark dipped 0.3% while shares in the alcoholic drink supplier slumped 4% to $10.52 after one of its biggest supporters downgraded the stock.

UBS cut its recommendation on Treasury Wines to “neutral” from “buy” on the back of management’s dismal trading update.

Downgrades come in threes

The company expects FY20 EBITS (earnings before interest, tax, the agricultural accounting standard SGARA and material items) to range between $530 million and $540 million. This is around 6% below consensus forecasts.

That doesn’t sound like much, but the broker believes there is a chance of a further profit warning for its Americas business.

The broker believes about 60% of the weakness in sales in that region is driven by the COVID-19 pandemic. But Treasury Wine is also losing market share and the industry is in oversupply.

While UBS still believes the stock represents a longer-term opportunity, it acknowledges the lack of near-term catalysts for the stock. The broker’s price target on TWE is cut to $11.80 from $14.80 a share.

Powering down

Meanwhile, the AGL Energy Limited (ASX: AGL) share price is trading flat even as Macquarie Group Ltd (ASX: MQG) downgraded it to “underperform” from “neutral”.

The fact that the electric utility isn’t falling harder may be due to the perceived defensiveness of its business during these highly volatile times.

But AGL may be proving a false sense of security as Macquarie believes its earnings are at risk of falling when customer contracts come up for renewal.

Earnings shocker

Spot electricity prices are significantly lower than the contracted price due to weakening demand from ongoing recession (short-term impact) and the growth of renewables and battery storage (longer-term).

AGL’s expiring contract with Alcoa only adds to its woes. The broker estimates that Alcoa is paying   around $55 to $60 per megawatt hour under the contract and this could drop to circa $40/MWh when it resigns.

That equates to an up to $80 million earnings hit for AGL in FY22 if AGL resigns the aluminium producer as a client.

Macquarie’s 12-month price target on the stock is $15.91 a share.

If you are looking for better priced ASX stocks to buy for FY21, the experts at the Motley Fool have picked some of the favorites for the year ahead.

Click on the link below to find out for free what these stocks are.

More reading

• Fund managers have been buying Costa and this ASX 200 share
• Brokers name 3 ASX 200 shares to buy today
• ASX 200 down 0.2%: Big four banks tumble, Afterpay surges higher again
• Zip share price surges 30% in a week. Are we calling bubble yet?
• Is the Woolworths share price a buy?

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Treasury Wine Estates 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.

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Looking to expand your ASX share portfolio with quality shares for the long term?

I believe that TPG Telecom Ltd (ASX: TPG), Ramsay Health Care Limited (ASX: RHC) and Bravura Solutions Ltd (ASX: BVS) are all good options.

All three ASX shares have a strong presence in their respective markets, and also have strong long term growth potential.

TPG Telecom

TPG is now Australia’s the second-largest fixed broadband provider after Telstra Corporation Ltd (ASX: TLS). This followed a series of acquisitions dating back to 2011.

TPG has struggled over the past few years from a financial perspective. This is mainly due to due to the lower retail margins it receives from wholesaling services on the National Broadband Network (NBN).

However on the back of TPG’s merger with Vodafone, the telco is now in a much stronger position to compete with its two largest competitors: Telstra and Optus. I believe that the newly merged TPG-Vodafone is well positioned to roll out a competitive 5G offering, on the back of Vodafone’s current network. It is is also well placed to offer a more competitive fixed broadband offering through the NBN.

Ramsay

Ramsay has evolved significantly over the past few decades. It has transitioned from a small Australian hospital operator to become Australia’s largest private healthcare provider. Ramsay now has operations spanning 11 countries globally. Ramsay’s size and market scale provides it with a distinct competitive advantage over its competitors in negotiations with health insurers.

Elective surgeries were significantly impacted during the early phases of the coronavirus pandemic, but are now starting to recommence in some markets. The healthcare provider also recently managed to close a number of important government deals in Australia and the United Kingdom.

I believe that Ramsay is well positioned for strong growth over the next decade, driven by the rising global demand for healthcare services.

Bravura

Bravura is an Australian-based fintech company. It provides mission-critical enterprise software solutions for the wealth management and funds administration industries.

In FY 2019, Bravura’s overall revenue increased strongly by 16% to $257.7 million and its earnings before interest, tax, depreciation and amortisation increased by 27%. This solid result followed on from strong revenue growth since it was founded in 2015.

More recently, Bravura confirmed it has not seen a significant decline in demand during the coronavirus pandemic. It also reaffirmed its earnings guidance for FY 2020 and expects to see growth in net profit after tax in the mid-teens.

I believe that Bravura is well placed for strong growth over the next 5 years, driven by an expanding market presence in its key markets: Australia, New Zealand, the United Kingdom, and South Africa.

More reading

• 3 of the best ASX 50 shares to buy right now
• 3 defensive ASX shares to add to your portfolio
• Why the Telstra share price could be set to soar
• Is the Telstra share price a buy?
• Why PolyNovo and this ASX mid cap share could be future large caps

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia has recommended Ramsay Health Care 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.

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The Australian medical sector has been one of the great drivers of innovation in global health for decades. For example, Australians created the electronic pacemaker. In addition, together with Alexander Fleming, we helped pioneer the life saving application of penicillin. We also developed the world’s first vaccine to prevent cervical cancer. Consequently, it should be no surprise that we have a range of breakthrough healthcare shares on the ASX today.

I believe the following ASX healthcare shares have, firstly, pioneered solutions for new or unmet challenges and, secondly, started to gain some momentum. 

Defeating sepsis

Sepsis is a life-threatening, inflammatory response to infection that has spread in the body. Consequently, any infection has the potential to cause sepsis. The following figures may shock you, they shocked me.

A study published in The Lancet medical journal in 2018 revealed there were 11 million sepsis-related deaths worldwide in 2017 alone. The study, which included 195 countries, highlighted the fact that sepsis accounted for 19.7% of all deaths globally. Kind of puts things into perspective doesn’t it? 

Enter Recce Pharmaceuticals Ltd (ASX: RCE). This ASX healthcare share is developing a new class of synthetic antibiotics. They are designed to deal with the new form of antibiotic-resistant superbugs. As such, they continue to be effective, even with repeated use. 

The company’s primary focus has been to develop a treatment for sepsis. Its lead candidate, RECCE® 327, has received awards labelling it for ‘fast track designation’. This allows global regulators to expedite the review and approvals process. Furthermore, it grants the product 10 years of market exclusivity post approval.

On Thursday, following a 2-day pause, Recce shares began trading again after announcing two of its products had been selected as part of a CSIRO study for antiviral treatments to manage COVID-19. Correspondingly, the Recce share price rocketed up by 54.14% yesterday.

Healing broken bones

Osteopore Ltd (ASX: OSX) is an ASX healthcare share that has patented a world first technology in the production of 3D-printed, bioresorbable implants. These implants are used in conjunction with surgical procedures to facilitate bone healing. They do this by providing a lattice or framework between the two ends of a break for the bone to grow back on. Once the bone has healed, the material is absorbed into the body.

Alternatives to Osteopore include bone grafts and permanent implants, i.e. plates and pins. There are, however, competitors to Osteopore in the substitute bone graft space. Nevertheless, the company’s competitive advantage lies in its 3D printing technology, for which it holds a number of patents. Moreover, this technology is precise and allows for customisation of shape and geometry.

The current bone graft substitute market is worth around US$4 billion, whereas sales of permanent implants are estimated at over US$100 billion annually. Most of which is in the United States.

As at February 2020, the company’s products had been used to successfully treat around 30,000 patients, predominantly in the Asia Pacific region. On 2 July, Osteopore announced it has signed a distribution agreement with a United States company. This opens up significant opportunities for it to capitalise on this highly lucrative market. The Osteopore share price rocketed more than 270% to a new all-time high of $1.49 following the announcement. Shares have since fallen back and are currently trading at 58 cents. 

Foolish takeaway

These are just two of the many pioneering, healthcare shares available on the ASX. I believe they offer proven technologies and limited requirement for regulatory approval (or considerable expertise in how to navigate the regulatory system, at the very least). I expect both of these healthcare shares to do well over the medium term. Having said that, being fairly newly listed, small caps, there is likely still a lot of bumpy road between now and a 10 times increase in the current share price.

More reading

• 3 innovative ASX shares to buy
• Osteopore share price storms 270% higher on distribution deal

Motley Fool contributor Daryl Mather 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.

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I think this year is a good time to invest $1,000 into ASX shares. It’s good to invest during times of uncertainty because share prices are usually lower.

The most important thing to help investment returns, apart from picking a good choice, is the price you pay when you invest.

Here are three ASX shares that I’d invest $1,000 into right now:

Share 1: Bubs Australia Ltd (ASX: BUB)

Bubs could be a future star of the ASX in my opinion. It’s an infant formula business that specialises in goat milk products, but it has also recently launched a (cow) grass-fed organic range of infant formula which could also prove popular. The company continues to increase its distribution footprint. 

In the quarter to 31 March 2020, infant formula revenue rose 137% compared to the prior corresponding period and represented 58% of that quarter’s gross sales. I’m not expecting revenue to keep doubling every single quarter for many years, but I think Bubs has a long growth runway considering it’s starting from a small base. 

One of the key features I look for in exciting ASX shares is the desire to expand internationally. Australia is a great country, but Asia (and beyond) offers a much larger total addressable market. That is exactly where Bubs is targeting. Chinese revenue rose by 104% in the three months to 31 March 2020 and ‘other market’ revenue rose almost 20 times compared to the prior corresponding period and represented 12% of gross sales in the quarter.

Unless something goes quite wrong, like a collapse in relations with China, I think the Bubs share price has a lot of growth potential over the next five years. The fact the company is generating positive operating cashflow is a helpful step. 

Share 2: Brickworks Limited (ASX: BKW)

Brickworks looks like one of the best value ASX 200 shares in my opinion.

It owns a large chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and it also owns 50% of a growing industrial property trust. These two assets alone provide the valuation backing for the Brickworks market capitalisation. Brickworks recently announced that a huge Amazon distribution facility will be built at its Oakdale West site which will help boost the trust’s net asset value further.

Building product divisions make up the rest of the company. In the US it’s focused on producing and selling bricks, whilst in Australia it has a strong position in bricks, paving, masonry, roofing, precast and so on. Construction has suffered a COVID-19 hit, but the bottom of the cycle is a good time to buy a business exposed to cyclical factors. Brickworks is seeing a recovery in both Australia and the US.

At the current Brickworks share price it offers a grossed-up dividend yield of 5.3%.

Share 3: City Chic Collective Ltd (ASX: CCX)

City Chic is another of the most promising small cap ASX shares in my view.

It’s a fashion retailer of plus-size clothing and accessories. Before COVID-19 it already sold a good amount of products through online channels, but it has really excelled over the past few months. The City Chic share price has risen 312% since 23 March 2020.

Near the end of May the company said it achieved 57% online sales growth during the period where its stores were closed. It has agreed rent cuts with a large majority of landlords and the company is eligible for wage support in Australia and New Zealand. This is all helpful for City Chic’s FY20 and FY21 earnings. 

The company seems determined to take advantage of the difficult circumstances to boost its market position in the plus-size fashion space. It’s currently looking for other acquisition opportunities which could improve the company’s position. 

At the current City Chic share price it’s trading at 34x FY21’s estimated earnings. 

Foolish takeaway

I like all three ASX shares at the current prices. For the long term I think Bubs could make the best returns over the next few years with the speed of its current growth. 

More reading

• 3 top ASX 200 shares for any portfolio
• Plummeting retail spend puts ASX fashion shares under the microscope
• 3 ASX shares I’d buy with $6,000 today
• 3 ASX dividend shares to grow and diversify your income
• Have $10,000 to invest? I’d pick these ASX shares

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, BUBS AUST FPO, and Washington H. Soul Pattinson and Company 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.

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