With interest rates at record lows and likely to remain there for some time to come, I continue to believe the share market is the best place to put your money.
But where should you invest your funds? Here are two top ASX 200 shares I would invest $5,000 into right now:
CSL Limited (ASX: CSL)
The first ASX 200 share to consider buying with $5,000 is this biotherapeutics company. I believe a recent pullback in its share price has created a buying opportunity for investors. Especially those that are interested in making a long term investment. This share price weakness has been driven by concerns over its plasma collections during the pandemic and the impact this might have on future immunoglobulin and albumin production.
While this is certainly a risk to consider, I'm optimistic that collections will accelerate once the crisis passes. Especially given the higher unemployment levels, which traditionally leads to higher donations. Another positive is that the pandemic is expected to lead to a sharp increase in demand for flu vaccines in the near term. This increase in demand could offset any weakness experienced with immunoglobulin and albumin sales in FY 2021. Outside this, I believe CSL's pipeline of lucrative therapies have the potential to drive significant sales and profit growth over the next decade. Overall, I think this makes CSL one of the best buy and hold options on the ASX 200 today.
Xero Limited (ASX: XRO)
Another ASX 200 share to consider buying is cloud-based business and accounting software provider Xero. It has really caught the eye in recent years thanks to its stellar recurring revenue growth and the emergence of its operating leverage. This was on display for all to see in FY 2020 when Xero delivered a 29% lift in annualised monthly recurring revenue (AMRR) to NZ$820.6 million and a 52% increase in EBITDA to NZ$139.17 million.
The key drivers of this have been strong growth in subscription numbers, its high retention rate, and a modest increase in average revenue per user. In respect to the former, Xero added 467,000 net subscribers during the 12 months to finish the period at 2.285 million. And while this is a large number, the company estimates that less than 20% of the global English-speaking target market is using cloud-based accounting software at present. Given how superior this type of software is to Excel spreadsheets and notebooks, I expect more businesses to shift to the technology in the coming years. I believe this will support solid subscription and sales growth over the next decade.
