If small caps are too high on the risk scale for your tastes, then you might be better off looking at the mid cap space.
These companies are lower down the risk scale but still have the potential to generate outsized returns for investors in the future.
Two mid caps that tick a lot of boxes are listed below. Here’s what you need to know about them:
Life360 Inc (ASX: 360)
Life360 is a San Francisco-based company that operates a platform for busy families. Its app aims to bring them closer together by helping them better know, communicate with, and protect the people they care about most.
The company’s core offering, the Life360 mobile app, is a market leading app for families. Its features range from communications to driving safety and location sharing. At the end of December, it had more than 26 million monthly active users located in 195 countries.
Despite facing tough trading conditions during COVID-19 (lockdowns, lower mobility), Life360 still delivered a very strong result. For the 12 months ended 31 December, it posted normalised revenue of US$81.6 million, which was up 39% year on year. It was also at the upper end of its guidance range of US$79 million to US$82 million.
Positively, with COVID-19 headwinds starting to ease, management is confident that FY 2021 will be a positive year. It is targeting Annualised Monthly Revenue in the range of US$110 million to US$120 million, which will be a 23% to 34% increase year on year.
Bell Potter is a fan of the company. The broker currently has a buy rating and $6.00 price target on its shares.
Nuix Limited (ASX: NXL)
Another mid cap ASX share to look at is this leading provider of investigative analytics and intelligence software.
Nuix has a number of products that have been helping some of the biggest companies and organisations in the world sort and analyse huge amounts of data. This includes AIG, Airbus, Amazon, BDO, HSBC, Samsung, and Unilever.
And while the market was bitterly disappointed with its half year results in February, it is worth noting that management blamed this on timing. As a result, it still expects to deliver its guidance for solid growth in FY 2021.
Looking ahead, the company has a large addressable market to grow into in the future, which has the potential to underpin strong sales and earnings growth for a long time to come.
Morgan Stanley is positive on the company. It currently has an overweight rating and $10.75 price target on the company’s shares.
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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. recommends Life360, Inc. and Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.