The S&P/ASX 200 Index (ASX: XJO) is full of good quality shares. I think some ASX 200 shares are definitely worth investing in for the long-term.
Let’s get straight into it, here are my three long-term ASX 200 ideas:
Altium Limited (ASX: ALU)
Altium is an electronic PCB software business that provides the tools for engineers to design the products, devices and vehicles of the future.
The ASX 200 share has an impressive list of existing clients including John Deere, Tesla, Space X, Broadcom, Qualcomm, Google, Amazon, Disney, Cochlear Limited (ASX: COH), CSIRO and NASA.
Altium has largely been hitting its long-term goals for a number of years. It’s now aiming for 100,000 Altium Designer seats as well as US$500 million revenue by 2025. Considering the company didn’t even reach US$200 million in FY20, there is a lot of potential growth between now and then.
The company is in a strong financial position with no debt and a cash balance of over US$90 million.
I think the ASX 200 share is a great long-term option because it’s one of the few ASX businesses with a global client base, it has growing profit margins (aside from FY20 perhaps) and a growing dividend.
The world is only going to become more technological, I think Altium is in the right industry to benefit from that.
At the current Altium share price it’s trading at 49x FY22’s estimated earnings.
Brickworks Limited (ASX: BKW)
Brickworks has already been around for decades and I think it’s got a compelling long-term future ahead with its various divisions.
It owns a large amount Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. The diversified investment conglomerate provides Brickworks with rising dividends and long-term capital growth. I think this a great long-term investment for Brickworks.
The ASX 200 share also owns half of an industrial property trust along with Goodman Group (ASX: GMG). This industrial property trust offers resilient rental income for Brickworks. But over the next few years there could be a sizeable increase in the rental income and valuation of the property trust when two large distribution warehouses are completed for Amazon and Coles Group Limited (ASX: COL). I really like this division for its defensive attributes.
The other main section of Brickworks is building products. It manufactures building products in both the US and Australia. In the US it recently made some acquisitions and now it’s the leading brick manufacturer in the north east of the US.
In Australia it sells a variety of different products including bricks, precast, roofing, masonry, paving and so on. It’s the biggest brick manufacturer in the country.
Building products is going through a tough period due to COVID-19, but I think it’s a good idea to invest in cyclical businesses when they’re at the worst point of their cycle.
At the current Brickworks share price it offers a grossed-up dividend yield of 5%.
A2 Milk Company Ltd (ASX: A2M)
I think that A2 Milk is one of the highest quality shares in the ASX 200.
The infant formula business has impressively built a good market position in New Zealand, Australia and Asia.
The company has seen stronger earnings, despite COVID-19, as customers stocked up on products.
I really like the long-term growth potential of A2 Milk. It’s being sold in thousands of more stores in the US each year, which increases its potential customer base. It takes a while before customers are willing to switch over to a new product.
Soon the ASX 200 share will be generating earnings from Canada with an agreement with Agrifoods.
A2 Milk has a huge cash pile that could be used for acquisitions or shareholder returns. I think the company has the right strategy by aiming for an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of around 30% – it balances growth and short-term profitability nicely.
At the current A2 Milk share price it’s trading at 30x FY22’s estimated earnings.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of A2 Milk and COLESGROUP DEF SET. The Motley Fool Australia has recommended Cochlear 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.