If you’re looking for strong returns over the next decade, but small caps are too risky for your tastes, then you might want to take a look at the mid cap space.
I think this is a great side of the market to look for investment ideas. This is because mid caps traditionally carry less risk than small caps but offer stronger potential returns than large caps.
With that in mind, I have picked out three top mid cap ASX shares which I think would be top options:
Collins Foods Ltd (ASX: CKF)
The first ASX mid cap share to consider buying is Collins Foods. It is one of the ANZ region’s largest KFC restaurant operators and also has a growing presence in Europe. It is these operations that I’m most bullish on over long term. Due to the under penetration of the KFC brand in Europe, I believe there is a significant expansion opportunity over the next decade. In addition to this, the company’s rollout of the Taco Bell brand across Australia appears to be going well and could be supportive of growth in the coming years.
EML Payments Ltd (ASX: EML)
Another mid cap share to look at is EML Payments. It is a payments company with a focus on pre-paid cards and digital gift cards. It provides its services to a wide range of businesses such as shopping centres, bookmakers, and salary packaging companies. Given its exposure to shopping centres, its performance is likely to be impacted greatly because of the pandemic. However, I believe this is understood and built into its share price now. In light of this, I would suggest investors focus on its very positive long term outlook. Which was boosted recently with the acquisition of UK-based Prepaid Financial Services. This has diversified its offering and gives EML access to the emerging field of banking as a service.
Jumbo Interactive (ASX: JIN)
A final mid cap share to consider buying is Jumbo Interactive. It is an online lottery ticket seller and the operator of the Oz Lotteries website. Jumbo also has a growing Software as a Service (SaaS) business which looks set to be the key driver of growth in the future. It is the international expansion of this business that is expected to 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. Considering how the majority of lotteries globally are still not online, I believe the Powered by Jumbo SaaS business has a very lucrative global opportunity.
Where to invest $1,000 right now
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*Returns as of February 15th 2021
James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Emerchants Limited and Jumbo Interactive Limited. The Motley Fool Australia has recommended Collins Foods Limited. 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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