The Motley Fool

Should you buy Nearmap and these mid cap ASX shares?

I think the mid cap side of the market is home to a good number of companies that have the potential to grow at a strong rate over the next decade and provide market-beating returns for investors.

Three top mid cap shares to consider are listed below. Here’s why I like them:

Collins Foods Ltd (ASX: CKF)

Collins Foods is a quick service restaurant operator best-known as an operator of KFC restaurants across Australia, Europe, and New Zealand. In addition to KFC, the company operates 85 Sizzler restaurants predominantly in Asia and has just begun rolling out the Taco Bell brand across several Australian states following a successful trial period in Queensland. Whilst I think the Taco Bell brand has a lot of potential, I expect the main driver of growth over the next decade to be its KFC expansion in an underpenetrated European market.

Nearmap Ltd (ASX: NEA)

Another mid cap growth share to consider buying is this aerial imagery technology and location data company. It has been growing at an astonishing rate in recent years thanks to increasing demand for its services in both Australia and the United States. This strong form has continued in FY 2019 with the company reporting a 46% increase in first half revenue to $36.3 million and a 123% increase in total subscriber lifetime value to $1.07 billion. The latter metric could continue its strong growth in the coming years thanks to new product launches, increasing demand, and its planned expansion into new markets.

Zip Co Ltd (ASX: Z1P)

I have been very impressed with the performance of Zip Co in FY 2019 and believe it has demonstrated why it is a mid cap growth share to watch. In the first half of the financial year the company posted a 114% increase in revenue to $34.2 million and cash EBTDA of $2.4 million. This was driven by strong customer growth and record transaction volume of $495.2 million. Pleasingly, with the company well-funded to capitalise on growth opportunities and the buy now, pay later market continuing to grow, Zip Co looks well-placed to continue its strong form in FY 2020 and beyond.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. and ZIPCOLTD FPO. The Motley Fool Australia has recommended 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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