I’m always on the lookout for ASX200 shares that I want to buy for my portfolio.
I don’t think there’s much growth to be found at the large end of the ASX, but small caps might be a little too risky for most people.
The best options to consider could be the businesses lower down the ASX200 list that are well sized but still have plenty of room for growth.
For example, these two ASX shares would be prime contenders for my portfolio:
Brickworks Limited (ASX: BKW)
Brickworks is one of Australia’s largest construction materials businesses with its portfolio of brands including Austral Bricks, Austral Masonry, Austral Precast, Bristile Roofing, Auswest Timber, Bowral Bricks, Daniel Robertson, Nubrik and GB Masonry.
The combined effect of the federal election, APRA and the RBA could be a big positive for Brickworks’ Australian earnings if things pick up.
Its growing property trust is another positive with how much it is currently valued at and the growing rental stream it’s producing.
The potential for it to become a large brick player in the US is very appealing. It recently acquired the fourth largest brick business in the US, with a focus on the North East of the United States.
What I particularly like about Brickworks at the moment is that its share price has fallen 10% in the past two and a half months, I’m always willing to buy at cheaper prices.
The large holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares is another feature that could make Brickworks a market beater if Soul Patts continues to outperform.
Altium Limited (ASX: ALU)
Altium is my favourite ASX software business. It provides software to design electronic PCBs, which is only going to become more integral as time goes on with how much the ‘Internet of Things’ and other technologies will grow.
Over the past month the Altium share price has fallen over 10% as investors seek safer places for their cash. This provides us with a more attractive return, although Altium is still expensive relative to today’s earnings.
But I think there are a couple of reasons why Altium could be a good buy today. The Australian Dollar keeps weakening, which makes Altium’s US dollar earnings look more attractive to Australian investors.
I also like that Altium is keeping debt off its balance sheet, which puts it in good stead if the economy has a recession.
Both of these companies could beat the ASX quite substantially over the next five years in my opinion. At the current prices, Brickworks looks more attractive but I’d be happy to buy a parcel of both businesses today.
These top ASX shares could also be worth buying for the coming years in my opinion.
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Motley Fool contributor Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Brickworks. 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.