2 compelling ASX 200 shares that should be in your portfolio

The 2 S&P/ASX 200 Index (ASX:XJO) shares in this article are compelling businesses and should be in your portfolio for the long-term.

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There are a few really compelling shares in the S&P/ASX 200 Index (ASX: XJO). They might be worth a spot in your portfolio.

Shares in the ASX 200 might be large enough that they can get through rocky times, whilst also having good growth potential.

These two could well be worth thinking about:

Bapcor Ltd (ASX: BAP)

Bapcor describes itself as the leading auto parts business in Australasia. It has over 1,000 locations across Australia, New Zealand and Thailand.

The driving force of profit for the company is its Bapcor Trade business, which is predominately Burson. That's the business that provides high quality service for mechanics. It has been generating pleasing same store sales growth for years. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin was 14.9% two years ago, it was up to 18.3% in the FY21 half-year result.

Bapcor also has a large retail business called Autobarn. This is seeing strong growth during these unprecedented COVID-19 times.

It also has a specialist wholesale division with multiple businesses, with some being industry leaders in their categories.

There are a number of growth areas for the business. It's growing its existing network footprint. The ASX 200 share is optimising its supply chain. Bapcor is investing in new and upgraded technology. A key part of future growth is that it's expanding into Asia.

One way it's getting more exposure to Asia is an investment in Tye Soon. Bapcor now owns 25% of the Singapore-listed business. It's the most prominent auto parts distributor in South East Asia and North East Asia. It operates 60 locations which, in FY19, generated SG$222 million of revenue.

In a FY21 trading update for March 2021, the ASX 200 share said that business performance has continued at similar levels to the first six months. Trade same store sales went up 13%, Autobarn same store sales were up 35% and specialist revenue excluding acquisitions was up 17%.

The fundamentals of the vehicle aftermarket remain strong, with an increase in second hand car sales, continued preference for cars over public transport and more domestic holidays where people use their cars.  

EML Payments Ltd (ASX: EML)

EML has a payment solutions platform that provides the technology to power the payment process so money can be moved quickly and securely. It connects its customers to their customers.

It offers various products like virtual account numbers, gift cards, salary packaging, gaming payouts and so much more.

One of the main segments of EML's business is its general purpose reloadable (GPR). In FY21, it has become the largest and fastest growing segment. In the first half of FY21, more than 70% of deals won were in the GPR segment.

The ASX 200 share recently entered the opening banking sector (through an acquisition) which enables consumers and businesses to share banking data and initiative real time payments securely between two accounts.

The primary objective of open banking, according to EML, is to enable faster competition and innovation in banking and payments, improving the user experience for consumers and merchants.

EML says that combining its account to account services and opening banking with existing prepaid and banking as a service capabilities expands the addressable market and deepens existing relationships.

In FY21, EML is expecting revenue to grow by 45% to 56%, EBITDA to be up between 54% to 66% and underlying net profit to be up between 25% to 40% to a range of $30 million to $33.5 million.

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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