If I were given $1,000 to invest into some ASX shares, there are two that I’d pick.
It wouldn’t be one of the shares in the ASX20, I don’t think they have enough growth potential for my portfolio.
But I do like the sound of these two:
Magellan Financial Group Ltd (ASX: MFG)
Magellan is a funds management business.
The biggest part of its business is to manage investor money and invest in global shares. It concentrates on quality growth shares like Microsoft, Alphabet, Facebook, Yum! Brands and Starbucks.
It also runs another strategy that targets global infrastructure. Finally, it has an Australian shares strategy.
Between all of those strategies, Magellan has over $100 billion of funds under management (FUM) which generates significant levels of base management fees each year. Any outperformance of portfolios also generates performance fees for Magellan.
I think that Magellan’s solid investment returns and regular investor cash inflows should lead to attractive profit growth over time.
Magellan has also launched some fairly cheap exchange-traded funds (ETFs) for investors who want cheaper alternatives than Magellan’s main strategy which costs more.
One of the most exciting things in my opinion about Magellan is that it’s investing its own money/capital into private operating businesses. Two of the most exciting are new investment bank Barrenjoey and Mexican food chain Guzman y Gomez. I think these businesses have the potential to grow much larger over the years, with Magellan to benefit.
According to CommSec, Magellan shares are valued at 17 times the estimated earnings for the 2022 financial year
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is another ASX share that I think has a lot of growth potential.
The digital donation business is processing billions of dollars of donations for the large and medium US church sector.
It has benefited from the shift to digital payments during this difficult COVID-19 period. I think this trend from cash to digital will just continue over the coming years.
One of the great things about Pushpay is how scalable it is. The company’s gross profit margin increased from 65% to 68% in the latest result.
Revenue, cashflow and net profit all continue to rise strongly. As the processing volume gets bigger, Pushpay will continue to benefit from stronger operating leverage.
One of the biggest catalysts in the future could be geographical expansion to other countries, which could increase Pushpay’s total addressable market.
According to CommSec, Pushpay shares are valued at 27 times the estimated earnings for the 2022 financial year.
