ASX 200 (ASX: XJO) shares could be the place to find growth for a portfolio.
I’m not thinking about businesses at the very top of the list like Australia and New Zealand Banking Group Ltd (ASX: ANZ) or Rio Tinto Limited (ASX: RIO).
I believe there are options that are delivering both growth and consistency:
Metcash Limited (ASX: MTS)
Metcash is a very interesting company – it’s a mix of different businesses. It’s the largest supplier to independent supermarkets in Australia, with a retail network to 1,330 IGA stores. Wholesale customers include FoodWorks and BP. Another segment is hardware which includes Mitre 10, Home Timber & Hardware and Total Tools.
The ASX 200 share has a number of different segments.
In the Food segment it’s seeing growth opportunities, particularly with retailers now wanting e-commerce solutions. Metcash continues to invest in its logistics and supply chain to improve efficiencies.
In Hardware, the business is working hard at being the number one provider for tradespeople by being the best store in town. It’s the second largest player in the hardware market. There’s a strong environment for construction right now.
In Liquor, it’s the second largest player in the market, supplying 90% of independent liquor stores in Australia. Brands include Cellarbrations, IGA Liquor, Bottle-O and Thirsty Camel.
It has delivered a lot of growth since the onset of COVID-19. In the FY21 half-year result it saw 12.2% sales growth, underlying EBIT (EBIT explained) growth of 30.4% and underlying net profit growth of 43%.
Xero Limited (ASX: XRO)
Xero is another ASX 200 share that’s seeing quite a lot of global growth. It has been growing impressively for a number of years.
There’s high demand for time-saving accounting software that can be accessed anywhere at any time. Xero’s offering is well suited in this new online-focused world we find ourselves in.
The business reported in FY21 its operating revenue increased by 18% to $848.8 million (all figures are New Zealand dollars). Annualised monthly recurring revenue increased 17% to $963.6 million. That suggests there’s around 13% revenue growth for FY22 already baked in.
Operating revenue growth was largely supported by a 20% increase in subscribers to 2.74 million. Free cash flow more than doubled from $27.1 million to $56.9 million.
Xero’s gross profit margin saw further improvement, rising from 85.2% to 86% over the year.
Whilst the Xero share price may seem expensive, it still has a long global growth runway ahead to justify that.
