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2 quality ASX shares I’d buy for growth

In this current environment I think it’s important to focus on two things for long-term market-beating growth.

The first is quality. Everyone has their own definition of quality, but ultimately it has to show a past history of business success with a continuing growth trajectory.

The second thing I think we have to look for is international expansion. Australia (and New Zealand) are relatively small markets, there is a lot more potential returns to be found if businesses look at North America, Europe or Asia.

Here are two ASX shares I think fit the bill:

Bapcor Ltd (ASX: BAP)

Bapcor is Australia’s leading auto parts business thanks to solid organic growth of Burson’s same store sales plus store network growth, and several acquisitions over the past few years.

If Australia does slide into recession then auto parts demand could remain solid due to the fact that people are more likely to fix their car than buy a new one. However, subsidiaries like Autobarn may be more heavily affected.

In the medium-term the expansion into Asia with Bapcor Thailand is particularly exciting because it is a huge market due to the population size and there is less electric vehicle take-up.

Bapcor is guiding that net profit could grow by around 9% in FY19 and it currently has a grossed-up dividend yield of 4.15%.

MNF Group Ltd (ASX: MNF)

The telecommunications is a large player in the voice over internet protocol (voip) world with its software solutions. The company expects double digit compound growth for communication services over the next four years in Asia.

MNF is expecting to grow its gross profit margin in FY19 with a higher percentage of recurring revenue.

The company is looking to expand in Singapore and is predicting it will grow earnings per share (EPS) by at least 25% between FY18 and FY20. It currently offers a grossed-up dividend yield of 2.7%.

Foolish takeaway

Both of these businesses have seen their share prices suffer painfully over the past three months, but the underlying organic growth of MNF seems even more likely than Bapcor. At only 16x FY20’s estimated earnings I think MNF looks quite appealing at today’s price.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MNF Group Limited. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended MNF Group Limited. 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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