There are plenty of S&P/ASX 200 Index (ASX: XJO) shares that have growth potential.
But only some companies are rated as good buys at the moment because of the valuations.
The ASX is known for some giant businesses such as Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL) and BHP Group Ltd (ASX: BHP).
However, these two names are a fair bit smaller but have compelling factors going for them:
Bapcor Ltd (ASX: BAP)
Bapcor describes itself as Asia Pacific's leading provider of vehicle parts, accessories, equipment, service and solutions.
The public may know the ASX 200 share best for its retail business Autobarn and its trade business Burson Auto Parts. However, it also has the premium retail offering Autopro, service businesses like Midas, ABS, Shock Shop and Battery Town, as well as numerous specialist wholesale businesses specialising in truck parts, electrical parts and so on.
The Bapcor share price has taken a dive after the announcement of the accelerated departure of the company's managing director, and his falling out with the board.
However, the company continues to plan for growth. It wants to grow its total footprint from around 1,100 locations in FY21 to more than 1,500 over the next five years. It's also improving its online offering and rolling out "improved concepts" to differentiate against competitors.
Bapcor also plans to grown its market share of own brand products, with the aim of earning a higher margin on those sales.
The business also plans to invest in technology and become more efficient, so that it can generate higher margins.
Growth into Asia is another area of focus. It has a small but growing Burson network in Thailand and it also owns a quarter of Tye Soon, an Asian auto parts business.
At the current Bapcor share price, it is valued at 16x FY24's estimated earnings.
Cleanaway Waste Management Ltd (ASX: CWY)
Cleanaway Waste Management is an ASX 200 share that specialises in waste management, industrial and environmental services. It is one of the main providers of weekly bin collections.
The business has a number of facilities and processes to transform a significant amount of that waste into "valuable commodities" for different sectors. It is a business that is part of the 'circular economy'.
This company is rated as a buy by the broker Macquarie Group Ltd. The price target is $3.70, suggesting a potential rise of almost 20% over the next year if the broker is right.
Cleanaway recently completed the acquisition of some post-collection assets in Sydney from Suez for $501 million.
Those assets includes landfill operations with more than 15 years of forecast available airspace, as well as several transfer stations with waste processing capacity and capabilities.
The acquired facilities will enhance and complement the ASX 200 share's existing Sydney footprint and deliver an immediate post-collections solution for the Sydney region to internalise its waste, according to Cleanaway. It will immediately add to Cleanaway's earnings and be paid for by debt.
In the 2020 calendar year, the Sydney assets generated net revenue of around $193.1 million and normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of $76.9 million.
Cleanaway management said the addition of these assets is "transformational" for the NSW business.
Using Macquarie's numbers, the Cleanaway share price is valued at 27x FY23's estimated earnings.
