I believe the ASX is home to a good number of mid cap shares that have the potential to generate market beating returns for investors over the next five years.
But which mid cap shares should you buy? Two that I would buy are listed below. Here's why I rate them highly:
Jumbo Interactive (ASX: JIN)
The first mid cap share to consider buying is Jumbo. It is an online lottery ticket seller and the operator of the Oz Lotteries website. From this website the company resells tickets on behalf of Tabcorp Holdings Limited (ASX: TAH). Pleasingly, the two companies have recently agreed a long term reseller agreement. While this agreement is on less favourable terms compared to previous agreements, it provides a lot of stability and allows management to focus on the international expansion of its Powered by Jumbo SaaS business.
I believe this business will play a key role in the company achieving its target of $1 billion in ticket sales through its platform by FY 2022. This will be triple what it achieved in FY 2019. Looking even further ahead, management notes that it has a US$303 billion global total addressable market. And only 7% of this market is online at the moment, but likely to make the shift in the future.
Pushpay Holdings Group Ltd (ASX: PPH)
Pushpay would have to be my favourite mid cap share. It is a fast-growing donor management platform provider with a focus on the church, not-for-profit, and education sectors. Its increasingly popular and high quality platform has been growing its share of the U.S. church market at a rapid rate in recent years. This has led to Pushpay's recurring revenues increasing very strongly over the period.
Pleasingly, this strong growth looks unlikely to end any time soon. In FY 2021 management is confident that another strong result is coming and revealed that it expects its operating earnings to double. Looking further afield, Pushpay is aiming to win a 50% share of the medium to large church market in the future. This represents a sizeable US$1 billion opportunity, which is many multiples what it achieved in FY 2020. Given the quality of its offering and leadership position in the industry, I believe it will deliver on this target.
