ASX 200 (ASX: XJO) shares are a great place to look for long term growth opportunities.
I think there are quite a few stocks that investors need to pay attention to. Not for what happens in FY21, but the longer term growth over the next three years or five years and beyond.
I’m attracted to these ASX 200 shares:
Kogan.com Ltd (ASX: KGN)
The Kogan share price has dropped to an 11-month low after its March 2021 update. I think this presents a good opportunity to buy shares of a business that continues to grow in size, even if the share price does go lower during this year. The inventory issues are disappointing, but I think at this level it’s compelling for the long-term.
Kogan’s long term EBITDA margins (EBITDA explained) have been rising, it’s diversifying its earnings with growth into New Zealand and it’s investing to offer customers a better service and range. The Kogan Marketplace segment continues to grow very quickly. Overall growth is slowing, but I think the lower share price more than makes up for it.
Investors also need to remember that Kogan is paying out sizeable dividends every year, which boosts returns.
On broker UBS’ numbers, the Kogan share price is valued at 23 times the 2022 estimated earnings. It could pay a full franked dividend yield of 3.6% in FY22.
Magellan Financial Group Ltd (ASX: MFG)
The funds management business continues to see its funds under management (FUM) grow over time. At the last monthly update, it had reached $106 billion. That should lead to a higher underlying funds management profit, which has a very high profit margin.
Combined with the high dividend payout ratio, Magellan only needs to generate mid-to-high single digit FUM growth each year to generate good total returns when added to the growth generated by its principal investments division which includes the likes of Guzman y Gomez.
The next leg of sizeable growth for the ASX 200 share could come from a new retirement product which could prove popular in today’s environment.
Over the long term, Magellan’s portfolio of growing global blue chips should produce solid net returns, leading to good organic growth.
Bapcor Ltd (ASX: BAP)
Auto parts business Bapcor is really well placed to benefit from the current trends we’re seeing.
There’s the huge boom in retail spending by Australians after a year of elevated saving and government stimulus. Bapcor’s Autobarn business is benefiting with this. It continues to expand its retail store network (and other outlet brands, including Burson).
The ASX 200 share is also benefiting from the smaller number of new car supply coming into the country. That’s leading to more second hand car sales and people trying to make their own car last longer. Good news for Burson and Bapcor’s specialist wholesale companies.
Plus, there’s a much higher number of people holidaying with their cars because of international border closures – this should lead to more demand for Bapcor’s products.
On top of all that, Bapcor is aiming to grow in Asia with both its own Burson network and its investment in Tye Soon. Asia is a huge potential market.
There are a lot of growth levers that the business can pull.
I also have my eyes on other ASX growth shares that could make good returns over the next few years.
