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:
Hipages Group Holdings Ltd (ASX: HPG)
The first mid cap ASX share to look at is Hipages. It is a leading Australian-based online platform and software as a service (SaaS) provider that connects tradies with residential and commercial consumers.
Its increasingly popular platform helps tradies grow their businesses by providing job leads from homeowners and organisations looking for qualified professionals.
At the last count, over three million Australians had used Hipages, providing more work to over 34,000 trade businesses subscribed to the platform.
Goldman Sachs is very positive on the company and sees it as a great long term option. It notes that the company currently captures around 5% of total industry advertising spend. However, it sees scope for this to increase to 40% to 60% in the future as the company builds out its ecosystem.
Goldman Sachs recently reiterated its buy rating and $3.35 price target on its shares. This compares to the current Hipages share price of $2.42.
Jumbo Interactive (ASX: JIN)
Another mid cap ASX share to look at is Jumbo Interactive. It is an online lottery ticket seller which is best-known as the operator of the Oz Lotteries website.
While the company generates the majority of its revenue from the Oz Lotteries website, there's a lot more to it than that. Jumbo also has its own SaaS business – Powered by Jumbo.
This part of the business allows lottery operators to take their lotteries online without having to invest in a development team and build a website. Management estimates that the global lottery market is worth US$303 billion per year in transaction value. Positively, with only ~7% of this market online at the moment, Powered by Jumbo has an enormous opportunity to capture.
Morgan Stanley is bullish on the company. It currently has an overweight rating and $15.20 price target on its shares. This compares to the current Jumbo share price of $13.04.
