I continue to believe that the mid cap space is a great place to look for long term investment ideas.
This is because I feel there are a number of mid cap shares that have the potential to grow into large caps in the future, potentially generating outsized returns for investors.
Two mid cap shares that I would buy this month are listed below:
Bravura Solutions Ltd (ASX: BVS)
Bravura Solutions is a provider of software products and services to the wealth management and funds administration industries. I've been very impressed with the solid earnings growth the company has generated over the last couple of years. This has been driven largely by the increasing popularity of its Sonata wealth management platform.
And thanks to the Sonata platform's large market opportunity, I expect it to underpin strong earnings growth over the next few years. This should be complemented by its acquisitions of Midwinter for $50 million and FinoComp for $25 million. Both businesses are expected to bolster its offering and open it up to new and lucrative markets.
PolyNovo Ltd (ASX: PNV)
I think this medical device company is another mid cap share to buy. PolyNovo is the company behind the NovoSorb Biodegradable Temporising Matrix (BTM) technology, which was developed at CSIRO. When trauma to the skin occurs, large portions of the surface of the skin and its deeper layers are destroyed. NovoSorb BTM can be used to temporarily close the wound and aid the body in generating new tissue.
NovoSorb BTM has a sizeable $1.5 billion market opportunity in the treatment of full-thickness wounds and burns. But management isn't resting on its laurels and is seeking to extend its usage into other markets. It has its eyes on the hernia and breast treatment markets, which are even more lucrative. It estimates that these two markets would add an additional $6 billion to its addressable market.
