Brokers: 2 ASX 200 shares that could be top buys for growth

Brokers think these ASX 200 shares with growth potential could be leading opportunities.

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Key points

  • Macquarie has named two ASX 200 shares that have plenty of return potential
  • Goodman is a large, integrated industrial property business
  • Pinnacle is an investment manager that helps leading fund managers grow

Brokers love finding opportunities that could make money over the long term. The two S&P/ASX 200 Index (ASX: XJO) shares in this article are leaders in their sectors and brokers have rated them as buys.

There has been a lot of volatility in recent months, which has lowered the share prices of some of the businesses.

Here are two ASX 200 shares that are viewed as opportunities, particularly after the declines:

Goodman Group (ASX: GMG)

Goodman is a large developer, owner, and manager of industrial properties around the world.

It’s currently rated as a buy by the broker Macquarie, with a price target of $27.38. That rating came after Goodman’s FY22 third-quarter result, with the broker noting the stronger performance of the business.

Total assets under management (AUM) increased to $68.7 billion at the end of March 2022, despite the headwind of foreign exchange rates. Its AUM is expected to grow to more than $70 billion by June 2022.

It now has $13.4 billion of development work in progress (WIP) across 89 projects. Goodman said that it has seen 3.7% like-for-like net property income (NPI) growth in its managed partnerships.

The ASX 200 share increased its guidance for FY22 operating earnings per security (EPS) to 23%, up from 20%.

Goodman explained the tailwinds that are driving demand:

Consumers continue to seek faster and more flexible delivery. This requires intensification of warehousing in urban locations, and an increase in automation and technology to optimise delivery and improve efficiency. Our global business is concentrated in key urban locations and focused on delivering opportunities through planning, change of use, sustainability features and higher intensity use. This allows our customers to achieve greater value and enhanced productivity from the space, mitigating the higher cost.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is an investment platform business that aims to take investment stakes in high-quality investment managers. It can then help them grow with a number of business operations, allowing the fund manager to focus on the investing.

Some of those services it can help with include distribution and client services, fund administration, compliance, finance, legal, technology, seed [funds under management] FUM, and so on.

Hyperion, Plato, Solaris, Antipodes, Spheria, Firetrail, Metrics, Coolabah, and Five V are some of the investment managers it’s invested in.

The ASX 200 share is steadily investing in areas that give exposure to new asset classes and markets.

An important contributor to the company’s profit growth is an increase in FUM of its affiliates. In the FY22 half-year result, aggregate affiliate FUM increased 5% to $93.6 billion, while aggregate retail FUM increased 17% to $23.8 billion. This helped net profit after tax (NPAT) grow by 32% to $40.1 million.

The company is looking to grow in North America with its 32.5% stake in Langdon equity partners. The company is based in Toronto, Canada, and it’s focused on global and Canadian small cap shares.

The broker Macquarie also rates Pinnacle as a buy, with a price target of $11.90. That implies a possible upside of around 40% over the next year. However, the broker points out that the ASX 200 share’s FUM is expected to be hit in all of the current volatility.

On Macquarie’s numbers, the Pinnacle share price is valued at 21 times FY22’s estimated earnings.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended PINNACLE FPO. The Motley Fool Australia has positions in and has recommended PINNACLE FPO. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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