The ASX200 has a number of quality growth shares. I think there a few worth buying for your portfolio.
The good thing about many ASX 200 shares is that they’re small enough to still have good growth potential, but large enough to be pretty reliable.
Here are two I think are worth buying for the long-term:
Magellan Financial Group Ltd (ASX: MFG)
One of the most attractive things about Magellan is how scalable it is. The funds management business has a net profit before tax and before performance fees margin of around 81% of management fees, so a lot of the new revenue falls to the bottom line.
Magellan’s funds under management (FUM) is steadily growing organically thanks to long-term investment performance. It’s also growing thanks to monthly fund inflows. I like the partnership strategy that Magellan is taking with its investors.
New initiatives could also lead to more FUM such as a retirement product and the new low-cost ETF series.
The final area that I think that Magellan can generate growth is its private investments, which I suppose you could call private equity. Two of the investments that it has made include the new investment bank Barrenjoey and Mexican outlet chain Guzman y Gomez.
Looking at the earnings estimates on CommSec, Magellan is being priced at 17x FY23’s estimated earnings.
Brickworks Limited (ASX: BKW)
Brickworks is another ASX 200 business that I believe has long-term growth potential.
The company has four different areas that can generate growth in my opinion.
It has a strong market position in Australia as the leading brickmaker, it also manufactures and supplies various other building products including masonry and roofing. The company continues to invest in having the best manufacturing plants, which should ensure growth over time. Australia’s construction industry is seeing a recovery after COVID-19.
I’m excited by the growth potential in the US with its brickmaking divisions there.
The US is a huge market and over time Brickworks could expand its product range like it has in Australia. Brickworks is making the plants there a lot more efficient, which should improve margins.
Then there’s the non-construction assets.
Washington H Soul Pattinson and Co. Ltd (ASX: SOL) has been making long-term returns for Brickworks for many years and I think that’s just going to continue as it diversifies and improves its asset portfolio.
The property trust looks like it could add the most value to Brickworks over the next two years. The joint venture could see gross assets of the trust increase by around $900 million after the two new, huge warehouses are finished for Amazon and then Coles Group Ltd (ASX: COL). The Sydney industrial site may have a pipeline for another 5 years with how much land is still left to build on.
According to CommSec, Brickworks is priced at 19x FY21’s estimated earnings.
As well as Magellan and Brickworks, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.
