I think there are some great shares in the S&P/ASX 200 Index (ASX: XJO) that are worth buying.
However, there are some ASX shares that are trading with very high expectations like Afterpay Ltd (ASX: APT). There are some ideas that are probably near their (medium-term) peak like Fortescue Metals Group Limited (ASX: FMG). I also think that some shares face a disappointing future compared to the past like Westpac Banking Corp (ASX: WBC).
That only leaves a certain group of businesses that I would be happy to invest in at today's prices. Here are three ASX 200 share ideas I'd buy today:
A2 Milk Company Ltd (ASX: A2M)
I think that A2 Milk is the one of the highest-quality ASX 200 shares that investors can choose. It has done extraordinarily well for a number of years. It grows its profit and revenue year after year. In FY20 it grew its revenue and profit by around a third – a strong result.
A2 Milk is growing strongly in both China and the USA. These are much larger markets than Australia and New Zealand. I believe that A2 Milk can become a much larger business over the next decade by doing well in just the US and China. However, places like Canada and Europe are large long-term opportunities for further growth. I don't think the market is appreciating how long A2 Milk's growth runway is.
The A2 Milk share price has dropped 16% since 18 August 2020. That puts it at 24x FY23's estimated earnings.
Magellan Financial Group Ltd (ASX: MFG)
Magellan is a leading ASX-listed fund manager. Most of its funds under management (FUM) is focused on international equities, not ASX shares.
I think Magellan is one of the highest-quality managers in Australia. I really like how it operates with an aim of investing in high-quality businesses across all of its investing strategies. The unlisted Magellan Global Fund has a solid performance over the past decade with average returns per annum of 16.1%.
The manager recently reached $100 billion of FUM (again) as it recovered from the COVID-19 share market crash. That's a good milestone.
Magellan has always been a great business. I'm excited by the different growth ideas and it's intriguing to know that the retirement product is coming soon.
In recent weeks the Magellan share price has dropped 13%. Lower prices are better for a good business. It's priced at 18x FY23's estimated earnings with a current grossed-up dividend yield of 5.4%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is a regular pick of mine because it's genuinely one of the ASX shares I'd buy (and have bought) a lot for my portfolio. It's actually one of the largest positions in my portfolio. The reason for that is that it's a solid ultra-long-term pick. The investment conglomerate has been listed since 1903 and I think it could keep going for many more decades.
I like the idea of investing in businesses that I'd never have to sell. For starters, it limits capital gains tax events. Soul Patts could definitely be a hold-forever idea due to its investment house nature. It can steadily shift its investment holdings to the new opportunities over time. For example, it's looking to invest in regional data centres.
Its existing portfolio of businesses are attractive. It owns fairly defensive names like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Clover Corporation Limited (ASX: CLV), agriculture, resources, financial services and swimming schools.
I like the underlying ASX share holdings and I really like the direction that Soul Patts is investing recently.
At the current Soul Patts share price it offers a grossed-up dividend yield of 4.1%.
Foolish takeaway
I think each of the above ASX 200 shares are really good ideas to buy today. At today's prices I think each of them can beat the ASX 200 index return over the next few years, particularly A2 Milk with its international growth.
