2 top ASX 200 shares that might be buys today

These 2 S&P/ASX 200 Index (ASX:XJO) shares could be buys today. One of those ideas is Sonic Healthcare Ltd (ASX:SHL).

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The S&P/ASX 200 Index (ASX: XJO) has some shares that could get counted as top ideas today to think about.

These businesses are ones that are among the leaders in Australia and may still have plenty of growth potential.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is a pathology business with a market capitalisation of over $16 billion according to the ASX.

It has seen a high level of profit growth during FY21 because of all of the COVID-19 testing. FY21 saw net profit rise 166% to $678 million.

With this high level of profit, Sonic is increasingly focused on further growth opportunities, including acquisitions, contracts and joint ventures, supported by its “very strong” balance sheet. At the time of the half-year result, it was bidding on “significant” opportunities in Australia, the UK, the USA and Alberta in Canada.

Its pre-COVID, global base business is becoming increasingly less affected by social restrictions and fear of infection, through better community understanding of the dangers in delaying or avoiding essential healthcare services. The ex-COVID business only saw a 1% drop in revenue in the first six months of FY21.

Sonic is currently benefiting from the operating leverage of using its existing infrastructure. That’s how profit was able to grow 166%, but revenue ‘only’ grew 33%.

The healthcare ASX 200 share expects demand for COVID-19 PCR testing to continue into the foreseeable future. There’s also the potential growing demand for COVID-19 serology testing, in other words their immunity status.

According to Commsec, the Sonic share price is valued at 23x FY22’s estimated earnings.

Magellan Financial Group Ltd (ASX: MFG)  

Magellan is an Australian-based fund manager that has around $110 billion of funds under management (FUM).

The business continues to see an increase in its total FUM at a high profit margin. Magellan’s funds management’s business has a cost to income ratio (excluding performance fees) of 16.8%.

Magellan has been looking into other initiatives to grow long-term profit. It has taken investment stakes in external ‘principal investments’ that meet certain criteria. The board has set a pre-tax hurdle of 10% per annum over the business cycle for the principal investment portfolio.

Some of the early investments have been Barrenjoey, Finclear and Guzman y Gomez.

In the FY21 half-year result, average FUM grew 9% to $100.9 million, net profit rose 3% and the interim dividend increased 5%.

Magellan has recently told investors to expect the launch of Magellan ‘Futurepay’. That’s its upcoming retirement income focussed solution. It will be launched on 1 June 2021.

The CEO of Magellan Brett Cairns said:

We are pleased to announce the launch of Magellan FuturePay. We believe it will help address the challenges faced by many investors and their advisors.

Ord Minnett rates Magellan as a buy with a price target of $52. The broker has estimated that Magellan is priced at 18x FY22’s estimated earnings.

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Motley Fool contributor Tristan Harrison owns shares of Magellan Financial Group. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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