One side of the share market which I think is a great place to look for investment ideas is the mid cap space.
I like this side of the market because it offers stronger potential returns than the large cap side of the market, but arguably carries less risk than the small cap side of the market.
With that in mind, here are two mid cap ASX shares that I think are worth watching closely:
Kogan.com Ltd (ASX: KGN)
The performance of this growing ecommerce company has been a little up and down over the last couple of years. However, there’s no doubt that it is well-positioned to have a strong second half following the coronavirus pandemic. As more and more retailers close their doors, Kogan stands to benefit greatly.
In fact, for some time now its website has warned that it is “currently experiencing high order volumes.” If the company serves these customers well, then there’s every chance they will return for more even when life returns to normal. So with its shares down materially from their 52-week high, I think now could be a good time to consider an investment.
Opthea Ltd (ASX: OPT)
Opthea is a leading developer of novel biologic therapies for the treatment of eye diseases. I think it could be a good option for investors right now due to its exceptionally strong balance sheet and its very promising OPT-302 combination therapy. This therapy is targeting wet age-related macular degeneration and diabetic macular edema and achieved very positive Phase 2b study results last year. This is a big positive as the standard of care treatments for these had combined sales of ~US$10 billion in 2018.
At the end of the first half the company had a cash balance of $75.1 million and no debt. I believe this is more than sufficient to see it through to its phase 3 study. Though, it is worth remembering that if its phase 3 study disappoints, its shares could come crashing down to earth. So any investment would be best restricted to just a small part of your portfolio.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com 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.