The Motley Fool

Why I would buy Zip Co and these ASX mid cap shares

I think that the mid cap side of the market is a great place to look for investment ideas.

This is because these shares are generally not as risky as small caps but offer greater potential returns that large caps.

With that in mind, here are three mid cap ASX shares that I would buy:

Freedom Foods Group Ltd (ASX: FNP) 

After a period of heavy investment, this diversified food company is now beginning to reap the benefits. In fact, analysts at Goldman Sachs expect Freedom Foods to deliver extremely strong growth this year. It has forecast revenue growth of 34% to $636.9 million and earnings per share growth of 100% to 18 cents in FY 2020. But it doesn’t stop there. Thanks to the expected growth of its Plant Based Beverage and Dairy Nutritionals divisions, Goldman expects earnings per share to double again to 37 cents by FY 2022. I think this could make it a top mid cap share to buy this month.

Nearmap Ltd (ASX: NEA)

Another mid cap share to consider buying is this leading aerial imagery technology and location data company. I have been very impressed with its performance over the last couple of years and believe it is capable of continuing this strong form over the coming years. Especially given the launch of new products such as Nearmap 3D. Furthermore, management estimates that it has only captured 1% to 2% of the North American market. Which means there is still a significant runway for growth in this key market.

Zip Co Ltd (ASX: Z1P)

A final mid cap share to consider is Zip Co. Although its shares have been on fire this year, I believe it could still be a very good long-term investment. In FY 2019 the buy now pay later platform provider grew its transaction volume by 108% and customer numbers by 80%. Impressively, management appears confident this strong form can continue. It is aiming to almost double both these metrics in FY 2020. Given the positive industry tailwinds, I wouldn’t bet against this. Especially considering its expansion into new geographies and verticals. A pullback in its share price this week could be a buying opportunity.

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

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 Freedom Foods Group 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.

Related Articles...