In the mid cap side of the Australian share market I think there are a number of companies with the potential to grow materially in the future.
Three that I feel could be destined for big futures are listed below. Here’s why I like them:
Bravura Solutions Ltd (ASX: BVS)
One mid cap ASX share that I think has significant potential is Bravura Solutions. I believe the provider of software products and services to the wealth management and funds administration industries can grow materially over the next decade thanks to the sizeable market opportunity of its key Sonata platform and recent acquisitions. Sonata is a next-generation wealth management administration platform that allows users to engage with their clients through a range of devices. Demand has been growing strongly in recent years and looks set to continue in the future. This should be supported by the aforementioned acquisitions which have opened the company up to new lucrative markets.
Megaport Ltd (ASX: MP1)
Another mid cap share to consider is Megaport. It is an elasticity connectivity and network services company. Its service allows its customers to increase and decrease their available bandwidth in response to their own demand requirements. This means they can consume the bandwidth they need when they need it, rather than be tied to fixed service levels on long-term and expensive contracts. It has proven very popular with businesses and has led to stellar recurring revenue growth. In the second quarter Megaport reported Monthly Recurring Revenue (MRR) of $4.6 million. This represents growth of 12% quarter on quarter and 68% on the prior corresponding period. And with larger and larger amounts of computer infrastructure going from local servers to cloud providers like Microsoft’s Azure, Amazon’s AWS, and Google Cloud, I believe Megaport is well-placed to benefit.
Zip Co Ltd (ASX: Z1P)
A final mid cap share to consider buying is Zip Co. The buy now pay later provider has really caught the eye over the last 12 months thanks to its impressive growth. In FY 2019 Zip Co grew its transaction volume by 108% and customer numbers by 80%. Pleasingly, management appears confident this strong form can continue. It is aiming to almost double both these metrics in FY 2020. Given its strong start to FY 2020, the positive industry tailwinds, and its expansion into new geographies and verticals, I wouldn’t bet against this being achieved.
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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 Bravura Solutions Ltd, MEGAPORT FPO, and ZIPCOLTD FPO. The Motley Fool Australia has recommended Bravura Solutions Ltd and MEGAPORT FPO. 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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