Tag: Motley Fool Australia

Better strap in and be prepared to ride the second wave of “irrational exuberance” fellow Fools!

That’s the term used by former US Federal Reserve Alan Greenspan to describe the tech bubble at the turn of the century.

We know how dramatically that bull market ended with overstretched valuation proving to be too much for share markets to withstand.

The same questions are being asked now with the S&P/ASX 200 Index (Index:^AXJO) rebounding close to 30% in just two months from its COVID-19 lows.

Tech bubble 2.0?

US equities have jumped even harder and that’s largely due to the tech titans Facebook, Inc. (NASDAQ: FB), Amazon.com, Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Netflix Inc (NASDAQ: NFLX) and Alphabet Inc (NASDAQ: GOOG).

You can see the connection with irrational exuberance, especially when experts warn the US market is expensive no matter now you look at it.

Oxford Economics is one ringing the warning bell as it believes US shares may be as much as 16% overvalued, according to Bloomberg.

Shares overpriced on multi-levels

The strategist for the forecasting and quantitative analysis firm, Daniel Grosvenor, even suggested that shorting the market is looking increasingly favourable.

“The S&P 500 is expensive versus history on almost all the measures we consider,” Grosvenor said.

Bloomberg reported that his measure of valuing companies by discounting the value of their future cashflows would still be 6% overvalued even with an assumption of a much higher terminal growth rate of 4%. The terminal growth rate assumption is usually set at CPI or a little less.

Is the ASX in a bubble?

Our market is also looking stretched. The ASX 200 is trading on a price-earnings multiple of around 17 times, or over 13% above its long-term average.

Given that the earnings growth outlook is pretty weak as the global economy gradually recovers from the coronavirus shutdown, some would argue the market should be priced at a discount to its average – let alone a premium.

These lofty valuations leave equities prone to a sharp sell-off when we hit the next storm cloud. I’ve listed a number of near-term thorny issues that could pop the bull party balloon here.

It’s not valuation, stooped!

But I don’t believe this isn’t the time to cut and run even as the valuation warning light flashes. This call isn’t based on irrational optimism either!

Remember the words from famed economists John Maynard Keynes? The market can stay irrational longer than you can stay solvent.

The tech wreck proved this. Greenspan’s warning of irrationality came in 1996 but the party didn’t stop till 2001. There have been a number of highly regarded fund managers who tried shorting the NASDAQ before the crash and they run out of money before they could collect on their bet.

Foolish takeaway

The thing is, valuations in themselves seldom spell the end of a bull run. We were struggling with this issue even before COVID-19, and if the pandemic didn’t happen, I believe the markets would have kept pushing to new record highs.

Irrational or otherwise, this bull run feels to me like it still has legs in the short-term and that’s in no small part due to the record amount of stimulus injected into the global financial system.

This doesn’t mean we won’t see a big correction, but unless something else pops out from left field, signs are pointing to more gains for the ASX over the coming weeks, if not a bit longer.

As the market adage goes – the trend is your friend.

Just don’t be the one holding the parcel when the music stops.

More reading

• These were the best performing ASX 200 shares in May
• 3 five-star ASX 200 shares to buy in June
• What to watch on the ASX 200 next week
• How to be an ASX 200 share millionaire in 15 years
• Where to invest $20,000 in ASX 200 shares today

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors.

Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Facebook, Microsoft, and Netflix and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon, Apple, Facebook, and Netflix. 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 your risk profile allows you to invest in small cap ASX shares, then you might want to take a look at the ones listed below.

I believe all five of these small cap shares have strong growth potential and could be future stars of the ASX. Here’s why they are on my watchlist:

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a provider of enterprise mobility software. Its software allows sales and service organisations to increase their sales win rates, reduce costs, and improve customer satisfaction through improved mobile worker productivity. Demand for its offering continues to grow from blue chip companies. This looks set to drive strong revenue growth again in FY 2020 despite the pandemic.

ELMO Software Ltd (ASX: ELO)

Another small cap ASX share which I think has a lot of potential is ELMO. It is a cloud-based human resources and payroll software company. ELMO provides users with a unified platform that streamlines processes such as recruitment, on-boarding, learning, and payroll. It has massive market opportunity in the ANZ market and the potential to expand globally in the future.

Nitro Software Ltd (ASX: NTO)

I think Nitro Software is a small cap ASX share worth keeping an eye on. It is a software company aiming to drive digital transformation in organisations around the world across multiple industries. Its core solution is the Nitro Productivity Suite. This provides integrated PDF productivity and electronic signature tools to customers through a horizontal, software-as-a-service, and desktop-based software solution.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap ASX share to watch is Volpara Health Technologies. It is a provider of software that uses artificial intelligence imaging algorithms to assist with the early detection of breast and lung cancer. Demand for its software continues to grow at a rapid rate. So much so, last week it reported a 153% increase in full year revenue.

Whispir (ASX: WSP)

A final small cap to watch is Whispir. It is a software-as-a-service communications workflow platform provider. Its industry-leading software platform allows organisations to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. Demand has been increasing strongly during the pandemic, putting it in a position to deliver a very strong full year result.

More reading

• Volpara share price edges higher after reporting FY20 results
• Are these exciting small cap ASX tech shares the next Afterpay?
• Why these 3 exciting ASX tech shares are surging higher today
• Why didn’t Warren Buffett buy more shares in the recent bear market?
• Why Afterpay and these ASX shares just zoomed to 52-week highs

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 BIGTINCAN FPO and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Elmo Software. The Motley Fool Australia owns shares of and has recommended Elmo Software and VOLPARA FPO NZ. The Motley Fool Australia has recommended BIGTINCAN FPO, Nitro Software Limited, and Whispir 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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The S&P/ASX 200 Index (ASX: XJO) continued its recovery in May with a very strong gain.

The easing of COVID-19 restrictions and a potential vaccine in the works helped drive the benchmark index 4.2% higher for the month.

And while a good number of shares were on form during the month, some sparkled more than others.

Here’s why these were the best performing shares on the ASX 200 in May:

The Southern Cross Media Group Ltd (ASX: SXL) share price was the best performer on the index with a massive 71.4% gain. It looks as though bargain hunters were snapping up the media company’s shares in May. Its shares have been hammed this year and are still trading 76% lower than their 52-week high despite this gain.

The Afterpay Ltd (ASX: APT) share price was a standout performer last month with a 52% gain. This strong gain was driven by two key pieces of news. The first was the arrival of Tencent Holdings on its share registry as a substantial shareholder. Investors appear to believe the massive Chinese conglomerate could help Afterpay expand into Asia. The other news that went down well with investors was its impressive customer growth in the United States. After two years in the country, Afterpay now has 5 million active customers.

The Nearmap Ltd (ASX: NEA) share price was on form in May and raced 49.7% higher. A good portion came at the end of the month when the aerial imagery technology and location data company released a market update. That update revealed that its annualised contract value (ACV) had hit $102 million financial year to date. This puts it well on course to achieve its full year ACV guidance of $103 million to $107 million. Another positive was that it is on track to be cash flow breakeven by the end of FY 2020.

The Webjet Limited (ASX: WEB) share price was a strong performer last month and jumped 35.2% higher. Investors were buying travel shares on the belief that tourism markets could recover quicker than anticipated. There has even been talk of a trans-Tasman travel bubble being created in the coming months. This would be great news for Webjet and limit the cash burn it is experiencing.

More reading

• Top brokers name 3 ASX 200 shares to sell next week
• 3 exciting ASX growth shares to buy next week
• 3 five-star ASX 200 shares to buy in June
• What to watch on the ASX 200 next week
• ASX retail shares best placed to benefit from wall of industry bankruptcies

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T 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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It was another strong month for the S&P/ASX 200 Index (ASX: XJO). Investors were piling into shares again after economies around the world started to reopen.

This drove the benchmark index 4.2% higher for the month, ending it at 5,755.7 points.

Not all shares were able to follow the market higher last month. Here’s why these were the worst performers on the ASX 200 in May:

The Incitec Pivot Ltd (ASX: IPL) share price was the worst performer on the ASX 200 in May with a 15.9% decline. Investors were selling the chemicals company’s shares after it announced a $600 million capital raising with its half year results. These funds were raised at $2.00 per new share, which represented an 8.7% discount to its last close price at the time.

The Alumina Limited (ASX: AWC) share price was out of form and fell 14.9% last month. This decline appears to have been caused by a broker note out of Credit Suisse. According to the note, the broker downgraded Alumina’s shares from an outperform rating to a neutral rating. It made the move after reducing its alumina price forecasts.

The New Hope Corporation Limited (ASX: NHC) share price wasn’t far behind with a 12.9% decline. A good portion of this decline came on the final trading day of the month after brokers responded negatively to its third quarter update. That update revealed a 22% decline in saleable coal production compared to the prior corresponding period. One broker that wasn’t impressed was Macquarie. It has an underperform rating and $1.30 price target on the coal miner’s shares.

The CSL Limited (ASX: CSL) share price was out of form and fell 10.7% last month. This appears to have been driven by profit taking after a strong gain over the last 12 months. Also potentially weighing on its shares are concerns over its plasma collections because of the pandemic. Any meaningful disruption to its collections could have impact on its FY 2021 performance.

More reading

• These were the worst performing ASX 200 shares last week
• 3 ASX dividend shares with yields over 10%
• Why I think the CSL share price is a strong buy today
• 10 quality ASX shares to buy in June
• 3 fantastic ASX growth shares I would buy and hold for decades

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 CSL Ltd. 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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Will the A2 Milk Company Ltd (ASX: A2M) share price hit $20 in 2020?

It has already been a strong performer since the start of this year considering there’s a coronavirus global pandemic going on. The A2 Milk share price has risen by 26% so far in 2020. Not bad!

The trading update last month told us that in the third quarter to 31 March 2020, revenue was higher than expectations. This came about from increasing buying during COVID-19 as well as beneficial foreign currency changes. The company’s a2 products are in high demand. 

Indeed, the trading performance is so strong that the full year earnings before interest, tax, depreciation and amortisation (EBITDA) margin is now expected to be between 31% to 32%. Pretty impressive considering the company is aiming for a 30% EBITDA margin.

That’s one of the main reasons why I think the A2 Milk share price could keep rising this year. The increase of the EBITDA margin this year shows there’s potential for a higher profit margin if the company wasn’t investing as much into growth. But it’s that growth that will make the biggest difference over the long-term. 

There is still so much room for growth.

I think there’s still a lot of growth potential in China. A2 Milk is only just getting started in the US – it could turn into a huge division if it goes well.

I’m also excited that A2 Milk will be expanding into Canada through an exclusive licensing agreement with Agrifoods Cooperative. A2 Milk will provide the intellectual property, marketing assets and experience. Agrifoods will provide the distribution and funding for this venture. A range of liquid milk products is expected to be launched later in 2020.

There are plenty of other countries to expand into. 

Is the A2 Milk share price a buy?

I think the A2 Milk share price is a buy at 27x FY22’s estimated earnings. At 31 December 19 it had a very good cash balance of US$618.4 million. That’s a big cash pile that provides excellent stability. The cash could also be used for future shareholder returns or perhaps acquisitions. I think the A2 Milk share price could hit $20 as long as there isn’t a market crash. 

I’d happily buy some A2 Milk shares for the long-term next week.

More reading

• How you can get very rich with ASX 200 shares
• 10 top ASX growth shares to buy in June for strong returns
• If you invested $10,000 in the a2 Milk Company ASX listing, this is how much you’d have now
• Brokers name 3 ASX 200 shares to buy right now
• 10 quality ASX shares to buy in June

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Afterpay Ltd (ASX: APT)

The bearish analysts at UBS have retained their sell rating but lifted the price target on this payments company’s shares slightly to $14.00. According to the note, the broker was impressed with its growth in the U.S. market, but feels it is a little soon to get excited. It notes that this has been driven by lockdowns and store closures and shouldn’t be extrapolated by investors. The Afterpay share price ended the week materially higher than the broker’s price target at $47.41.

Tabcorp Holdings Limited (ASX: TAH)

A note out of Citi reveals that its analysts have resumed coverage on this gambling company’s shares with a sell rating and $2.80 price target. The broker notes that Tabcorp is facing a number of headwinds. These include store closures, sports betting uncertainty, and the cycling of a run of large lottery jackpots from last year. In light of this, it expects the company’s earnings to come under pressure in FY 2020 and FY 2021. The Tabcorp share price last traded at $3.22.

Wesfarmers Ltd (ASX: WES)

According to another note out of Citi, its analysts have retained their sell rating but lifted the price target on this conglomerate’s shares to $36.00. The broker sees positives in its decision to consolidate the Target store network. It has also upgraded its earnings estimates to reflect stronger growth from the Bunnings and Officeworks business. However, this isn’t enough for a change of rating. The broker continues to believe its shares are fully valued and retains its sell rating. Wesfarmers’ shares ended the week at $40.37.

More reading

• ASX retail shares best placed to benefit from wall of industry bankruptcies
• How you can get very rich with ASX 200 shares
• The best ASX blue chip shares to buy in June
• The TPG share price is up 26.68% in 2020. Too late to invest?
• Are Coles shares a buy after falling 12% in 2 months?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers 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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If you’re looking to invest in ASX dividend shares, then I think the ones below could be quality options. 

All three have strong businesses and offer investors generous dividends. Here’s why I would buy them next week:

BWP Trust (ASX: BWP)

The first ASX dividend share to buy is BWP. It is a real estate investment trust which invests in and manages commercial properties throughout Australia. The majority of its properties are leased to hardware giant Bunnings. Given the quality of the Bunnings business, I believe the risk of rental defaults is minimal. Especially considering that Bunnings is owned by Wesfarmers Ltd (ASX: WES), which also owns a sizeable stake in BWP. Overall, I believe BWP is well-placed to grow its distribution at a solid rate over the next decade. At present I estimate that it offers investors a 4.8% yield.

Fortescue Metals Group Limited (ASX: FMG)

If you’re not averse to investing in the resources sector, then I think Fortescue could be a great ASX dividend share to own. Spot iron ore prices have remained strong throughout the pandemic and last week smashed through the US$100 a tonne mark. This bodes well for Fortescue and its low cost operations and improving grades. And given the strength of its balance sheet, it also bodes well for dividends this year and next. Predicting its dividend yield is difficult, but I believe it is safe to say it will be at least 6% in FY 2021.

Macquarie Group Ltd (ASX: MQG)

A final ASX dividend share to consider buying is Macquarie. I like the investment bank due to the quality of its operations and its talented management team. Another positive is the diversity of its earnings. This diversity means Macquarie can often thrive when the big four banks are struggling. And while the pandemic will inevitably weigh on its performance in the near term, I believe it will bounce back very strongly once the crisis passes. I estimate that its shares offer investors a partially franked 4.2% FY 2021 dividend yield.

More reading

• What selling ASX shares means at tax time
• What to watch on the ASX 200 next week
• 2 ASX shares to buy for strong retirement income
• Is the Fortescue share price under threat from a potential multi-million dollar earnings hit?
• Should you ever buy ASX shares at an all-time high?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group 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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Are you looking to buy some quality ASX options for long-term growth?

With the current share market volatility, some investors may be thinking that investing in shares is too risky.

However, I think it’s important to keep in mind share market volatility does happen from time to time.

Shares also have the advantage of providing capital gains, provided that you have a long-term investment horizon.

Also, dividend-paying ASX shares can set you up with a handy additional stream of income along the way.

So, with that said, here are two of my current top picks for long-term growth.

Commonwealth Bank of Australia (ASX: CBA)

Our big 4 ASX banks have had a difficult few months.

There all have witnessed major share price decline due to the impact of lockdown restrictions caused by the coronavirus pandemic. 

However, the outlook of our big 4 banks appears a bit brighter, with restrictions now beginning to ease.

Commonwealth Bank is my pick of the big four retail ASX banks right now.

I prefer it to rivals: Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ). 

I believe the Commonwealth Bank share price was sold off a bit too harshly over the past few months.

It tumbled from $91.05 in mid-February to end below $60 earlier this week. However, its share price has regained a bit of ground over the past week.

I think the bank is well-positioned to deliver relatively solid long-term growth, driven by a recovering housing market, once lockdown restrictions are further eased.

This provides long-term investors with a good buying opportunity in my mind.

Telstra Corporation Ltd (ASX: TLS)

Australia’s largest telecommunication provider has witnessed strong demand for its services throughout the pandemic.

Both its mobile and fixed broadband offerings provide essential services to businesses and consumers. There’s been a sharp increase in usage with many Australians being forced to work from home.

Also, more people are keeping in touch with family and friends online, or increasing their usage of streaming media services like Netflix.

In a recent market update, Telstra revealed that it is on track to achieve most of the goals that form part of its T22 strategy. This includes reducing underlying fixed costs by $2.5 billion annually by the end of FY22.

Telstra also announced that it will increase its overall network capacity and accelerate the rollout of its 5G network.

I feel that Telstra was, to some degree, unfairly caught up in the wider market sell-off in recent months.

I believe that this now provides a good buying opportunity for ASX buyers with a long-term investment horizon.

More reading

• What to watch on the ASX 200 next week
• Beat low interest rates with these ASX dividend shares
• How to be an ASX 200 share millionaire in 15 years
• 2 ASX shares to buy for strong retirement income
• Westpac isn’t ruling out negative interest rates in Australia

Motley Fool contributor Phil Harpur owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Telstra Limited, and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Telstra 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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I generally prefer to invest in ASX growth shares rather than their dividend-paying cousins. As a long-term shareholder, ASX growth shares enable me to benefit from tax-free compounding over many years. With dividend shares, however, you are required to pay tax every time you receive a dividend. So even if those dividends are reinvested, this occurs using after-tax dollars.

With this in mind, below are 3 exciting ASX growth shares I believe to be buys next week.

Avita Medical Ltd (ASX: AVH)

Avita Medical develops and markets a range of respiratory and regenerative medical products. The first product Avita brought to market was a spray-on skin treatment used for burns victims named ‘Recell’. In addition to being TGA approved in Australia, Recell is FDA approved in the USA and CE-marked in Europe.

Avita recently released results for the March quarter, which were its strongest since launching in the US. This quarter saw its total revenue jump 67% over the prior corresponding period. This is boosted to an 84% revenue increase when the time frame is extended to the 9 month period ending 31 March 2020.

Avita has largely been insulated from the coronavirus-led economic fallout. This is predominantly because treatment for burns patients tends to be neither elective or deferrable. Furthermore, the company is looking to use the Recell system to treat vitiligo and has plans to submit an application to the FDA in June 2020.

Nearmap Ltd (ASX: NEA)

I can’t go past Nearmap when it come to ASX growth shares. The Aussie aerial imagery and data insights company has been consistently growing its subscriber base, particularly across its North American segment. It has also been steadily improving its average revenue per subscription. Furthermore, the company recently launched another new product with Nearmap AI.

On Tuesday this week, I wrote that I believed Nearmap’s shares were still a buy, despite having risen more than 100% over the past 2 months. Since then, they have jumped again following a positive market update. The update stated that the company’s churn had dropped and its annualised contract value (ACV) has continued to grow. Nearmap’s ACV now exceeds $102 million. Additionally the company advised it is on track to be cash flow breakeven by the end of June. No doubt, all this good news put some investors’ fears to rest. This resulted in Nearmap’s share price surging by a further 16.67% on Thursday. 

Despite the current price gains, I still see the potential for ongoing value with Nearmap shares. The world is a big place, and I believe Nearmap has plenty of runway to expand its current market segments and break into new ones.

Audinate Group Ltd (ASX: AD8)

My 3rd pick of ASX growth shares to buy next week is Audinate. This company develops an audio-visual, industry-leading, media networking solution, called Dante. A mouth-full, I know! But what Dante allows audio professionals to do is use standard Ethernet networks to deliver uncompressed, multi-channel, low-latency audio. This removes the need for expensive cabling and more rigid and complicated networks.

The solution’s wide-spread adoption by manufacturers has meant that more and more Dante devices are now able to be connected together. Additionally, a Dante network offers superior flexibility, with changes able to be made with the touch of a button.

As social distancing restrictions were implemented throughout the world, Audinate was wary of possible impacts to its revenue resulting from reduced demand. However, the company’s strong balance sheet and recent revenue growth have ensured its resilience through the worst of the pandemic’s economic fallout so far. As economies around the world begin to open up, I believe strong demand for Audinate’s product will deliver continued company and share price growth.

More reading

• Top brokers name 3 ASX shares to buy next week
• The Nearmap share price is up 123% in 2 months: Why I think it can go higher
• Brokers name 3 ASX 200 shares to buy right now
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises again, ASX banks push higher

Michael Tonon owns shares of Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and Nearmap Ltd. The Motley Fool Australia has recommended Avita Medical 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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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 ASX mid cap shares.

I think this is a great side of the market to look for investment ideas. This is because mid caps generally carry less risk than small caps, but offer stronger potential returns than large caps.

With that in mind, I have picked out four top mid cap ASX shares which I think would be top options:

Bravura Solutions Ltd (ASX: BVS)

The first mid cap ASX share to consider is Bravura Solutions. It provides software and services to the wealth management and funds administration industries. It has a number of different products in its portfolio, which are being used by many of the world’s biggest financial institutions. This includes the Sonata wealth management platform which allows users to connect and engage with their clients anytime, anywhere, via computers, tablets, or smartphones.

Collins Foods Ltd (ASX: CKF)

Another ASX mid cap share to consider is Collins Foods. It is one of the ANZ region’s largest KFC restaurant operators and also has a growing presence in Europe. It is these operations that I’m most excited about. Due to the under penetration of KFC in Europe, I believe there is a significant expansion opportunity over the next decade. And although the pandemic will inevitably slow its expansion plans, I expect it to accelerate again when the crisis passes.

Jumbo Interactive (ASX: JIN)

Jumbo is an online lottery ticket seller and the operator of the Oz Lotteries website. The company’s shares have come under pressure this year, which I believe has created a buying opportunity for investors. Especially given its target of $1 billion in global ticket sales annually through its platform by FY 2022. This will be triple what it achieved in FY 2019.

Kogan.com Ltd (ASX: KGN)

A final mid cap ASX share to consider buying right now is Kogan. The ecommerce company has been a strong performer during the pandemic and more than doubled its sales and earnings in April. I believe the pandemic has accelerated the structural shift to online shopping and puts Kogan in a very strong position to deliver strong growth in the coming years.

More reading

• 10 top ASX growth shares to buy in June for strong returns
• Why Afterpay, Austal, Kogan, & Northern Star shares are charging higher
• Build wealth for life with these 2 ASX 200 shares
• 10 quality ASX shares to buy in June
• Where to invest $10,000 into ASX shares immediately

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd, Collins Foods Limited, and Jumbo Interactive 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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