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 over the long term.
With that in mind, I have picked out two mid cap ASX shares that have been rated as buys. Here’s what you need to know about them:
Audinate Group Limited (ASX: AD8)
The first mid cap ASX share to look at is this digital audio-visual networking technologies provider. Audinate is the company behind the industry-leading Dante audio over IP networking solution. This solution is used widely across a number of industries and is currently dominating the competition.
While demand softened greatly during the height of the pandemic, it has rebounded strongly recently. For example, Audinate’s fourth quarter revenue jumped 74% over the prior corresponding period. This led to the company achieving a 23% increase in revenue to US$25 million in FY 2021.
UBS is a big fan of Audinate. Last month it retained its buy rating and lifted its price target to $11.30. It has been pleasantly surprised by its strong rebound from the pandemic and notes its record high order backlog.
Another mid cap ASX share to consider buying is Nearmap. It is a leading aerial imagery technology and location data company.
Nearmap gives businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. This means that users can undertake site visits from the comfort of their home or workplace. This provides significant time and cost savings for users.
While Nearmap’s growth has been a bit up and down in recent years, management appears confident that it is heading in the right direction again. It is targeting annualised contract value (ACV) growth of 20% to 40% per annum over the long term, with underlying churn of less than 10%.
Morgan Stanley continues to be positive on the company. Last month it retained its overweight rating and lofty $3.20 price target on its shares. The broker was pleased with the company’s strong performance in the North American market which led to stronger than expected growth in FY 2021.