Goodman is one of two ASX 200 shares that could be opportunities.
The post 2 ASX 200 shares that could be buys for growth appeared first on The Motley Fool Australia. –
S&P/ASX 200 Index (ASX: XJO) shares could be a good hunting ground for investors to look for opportunities for growth.
Businesses in the ASX 200 have already reached a certain size, but some of them may still have plenty of growth potential to come.
Here are two that could still be long-term opportunities:
Goodman Group (ASX: GMG)
Goodman is one of the largest industrial property businesses in the world with a market capitalisation of $42 billion according to the ASX.
The business recently released its FY21 result to the market, which showed operating profit increased by 15% to $1.22 billion. Operating earnings per security (EPS) increased 14.1% to 65.6 cents, materially beating its guidance of 9% growth.
Overall, the business achieved a statutory profit of $2.3 billion, which included the benefits of property valuation increases. There were $5.8 billion of revaluation gains across the group and partnership assets combined.
Total assets under management (AUM) grew by 12% to $57.9 billion. The rental portfolio had a high level of performance. The occupancy rate was 98.1% and the like for like net property income growth was 3.2%.
There is a significant amount of work in progress (WIP) for the ASX 200 share, up 63% on FY20 to $10.6 billion across 73 projects with a yield on cost of 6.7%.
Goodman said it’s well positioned to maintain WIP of around $10 billion throughout FY22. Customer demand is translating into high occupancy and rental growth. It’s expecting AUM to grow to more than $65 billion.
FY22 operating EPS is expected to grow another 10% in FY22.
The broker Macquarie Group Ltd (ASX: MQG) currently rates Goodman as a buy with a price target of $24.84. It thinks Goodman’s guidance is conservative and expects stronger growth in FY22.
Sonic Healthcare Ltd (ASX: SHL)
Sonic is another ASX 200 share that is seeing an elevated level of demand for its services in light of the impacts of COVID-19.
This healthcare business is one of the companies involved in the fight against COVID-19 because it is doing millions of tests for people in the countries that it operates. Australia, North American and Europe are three large markets.
One of the brokers that likes Sonic Healthcare at the moment is Credit Suisse which has a price target on the business of $43.50. The broker points out that the Delta variant is leading to a large number of cases and tests in several of Sonic’s markets.
Due to this high level of testing, Sonic is expected to make big profit which will allow it to improve its balance sheet and pay a higher dividend. The ASX 200 share has already revealed an acquisition (Canberra Medical Imaging) as a way to boost earnings from this short-term earnings boost.
In the FY21 half-year result, Sonic grew revenue by 33% to $4.4 billion and net profit rose 166% to $678 million.
According to Credit Suisse, the Sonic Healthcare share price is valued at 22x FY22’s estimated earnings.
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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 no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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.