Believe it or not, Australians are very lucky to be living in the country that we are.
Longwave Capital chief investment officer David Wanis reckons local investors, especially, enjoy tremendous advantages buying S&P/ASX 200 Index (ASX: XJO) shares.
"Australia has three things that any country needs for sustained, long-term growth," he told the audience at the Pinnacle Summit in Sydney this week.
"We have capital — we have a huge superannuation system in Australia. We have incredible natural resources… And we have population demographics that are the envy of the developed world."
While most comparable nations are grappling with a rapidly ageing population, Australia is remaining relatively youthful — and therefore economically productive.
This is due to a high volume of immigration and government incentives for having children.
"We're going to stay younger and grow faster than almost every other developed country."
So considering all this, what are the ASX 200 shares Longwave is bullish on at the moment?
Here are two that Wanis named:
Image source: Getty Images
The stock price is 'quite compelling'
Disinfection technology provider Nanosonics Ltd (ASX: NAN) saw its share price rise earlier this year. But recently it's come back down to be just 0.7% higher than where it started 2023.
Wanis likes that Nanosonics has a "classic razor and razor blade model", where it makes recurring revenue from the ongoing sale of consumables.
"They sell the machine to the hospital, then every year they're selling consumables that go into that device.
"It's a very high quality business."
And the stock is trading for cheap, he reckons, with the share price now at only 16 times the 2025 estimated earnings for the flagship product Trophon.
"The valuation opportunity compared to large caps is quite compelling."
The Longwave team is not the only one bullish on Nanosonics.
"This is the company I came out of reporting season most excited about," said The Motley Fool's Mitchell Lawler this week.
"The medical disinfection technology company continues to expand its revenue, yet the share price would leave you thinking otherwise."
It's not the same company you know from 10 years ago
Wanis' other tip was CSR Limited (ASX: CSR).
He acknowledged that investors have past prejudices against the company.
"For many years they operated in intensely competitive, undifferentiated market settings. So what resulted from that was low and volatile returns."
But now that it has sold off the more unprofitable parts of the business, CSR is really a vastly different proposition to what it was a decade or two ago.
"They've focused their business on building product categories where they are either number one or number two, in highly consolidated markets with very little competition."
That has resulted in a "dramatic increase" in return on capital.
There is another reason why CSR, with a $2.85 billion market cap, has been neglected by investors until now.
"It's too small for large cap investors, and not exciting enough for a lot of small cap investors who are trying to find the next Afterpay.
"So CSR's a really interesting opportunity for us. We believe it's a really high quality business, trading at less than 10 times earnings."
