The Motley Fool

Why I would buy Bellamy’s and these ASX mid-cap shares

One of my favourite areas of the market to invest is the mid-cap space.

This is because I believe mid-cap shares are arguably less risky than small-cap shares and offer better potential returns than large-caps.

With this in mind, I have picked out three top mid-cap shares that I would buy this week. They are as follows:

Bellamy’s Australia Ltd (ASX: BAL)

Bellamy’s is one of Australia’s leading infant formula companies. Its shares have come under significant pressure over the last 12 months due to delays in gaining the SAMR accreditation required to sell its products in mainland China. While it is unclear if and when Chinese regulators will approve the company’s organic infant formula, I’m optimistic that the accreditation will be granted in the near future. Considering the company’s strong brand and its major marketing campaign in China, I feel this could lead to strong sales and earnings growth in FY20.

Collins Foods Ltd (ASX: CKF)

Collins Foods is a quick service restaurant operator with an expanding network of KFC restaurants across Australia, Europe, and New Zealand. It also recently rolled out the Taco Bell brand across several Australian states following a successful trial period in Queensland. The main attraction to the company for me is its massive opportunity in an under-penetrated European market, which I believe could underpin strong earnings growth for many years to come.

Nearmap Ltd (ASX: NEA)

Nearmap is an aerial imagery technology and location data company, which has been growing at an astonishing rate in recent years. Pleasingly, this has continued in FY19 with the company reporting a 46% increase in first half revenue to $36.3 million. While this top line growth was impressive, the metric that caught my eye was its 123% increase in total subscriber lifetime value to $1.07 billion. And with demand increasing and the company planning to expand into other countries, there’s a very good chance that this key metric will continue growing strongly in FY20.

5 stocks under $5

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James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Bellamy's Australia, Collins Foods Limited, and 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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