If I were fortunate enough to have $10,000 sitting idle in a savings account, I would look to put it to work in the share market.
After all, even with rates rising, the potential returns on offer are vastly superior to the interest rates most bank accounts offer right now.
In addition to this, with the market down materially from its recent high, there are a lot of high-quality companies trading at discounted prices.
But which shares could be buys? Here are two ASX 200 shares I would invest my funds into:
Goodman Group (ASX: GMG)
The first ASX 200 share that I would buy with these funds is Goodman Group. It is an integrated commercial and industrial property company that owns, develops, and manages industrial real estate across 14 countries.
Demand has been incredibly strong for its properties, which has underpinned stellar rental income growth for over a decade. The good news is that this looks set to continue in the coming years. This is being underpinned by long-term demand for industrial space from increasing e-commerce penetration and supply chain modernisation and its development work in progress of $12.7 billion. The latter comprises 81 projects with a forecast yield on cost of 6.7%.
And while Goodman’s shares trade at a premium to other property companies, I believe this is justified due to its quality and positive growth outlook. For example, Goldman Sachs estimates that Goodman will grow its earnings per share (EPS) by an average of 13% per annum from FY 2022 to FY 2024. This is well ahead of industry averages.
TechnologyOne Ltd (ASX: TNE)
Another ASX 200 share that I would invest $10,000 into is TechnologyOne. It is an enterprise resource planning (ERP) software company servicing the government, financial services, health, education, and utilities and managed services markets.
TechnologyOne has been growing at a solid rate for more than two decades and I believe it is well placed to continue this trend in the coming years. This is thanks to its leadership position in key verticals, the stickiness of its products, and its recent shift to a software-as-a-service (SaaS) focused business model.
Management expects the latter to underpin very strong high margin, recurring revenue growth in the coming years. For example, TechnologyOne is targeting SaaS annual recurring revenue (ARR) of $500 million by FY 2026. This will be more than double the $192.3 million it recorded in FY 2021 and represents a five-year compound annual growth rate of 21%.
In light of this strong growth outlook, I believe its shares are attractively priced at 30x estimated FY 2023 earnings.