The S&P/ASX 200 Index (ASX: XJO) is home to some of the most robust companies in their respective sectors, often boasting impressive profit margins. While giants like Commonwealth Bank of Australia (ASX: CBA) and Woolworths Group Ltd (ASX: WOW) dominate the banking and supermarket sectors, their growth potential may be limited due to intense competition. However, two ASX 200 shares stand out for their promising long-term growth prospects: Sonic Healthcare Ltd (ASX: SHL) and Temple & Webster Group Ltd (ASX: TPW).
Sonic Healthcare Ltd: A Global Leader in Pathology
Sonic Healthcare Ltd is a major player in the international pathology industry, also offering services in radiology, general practice medicine, and corporate medical services. The company employs 1,800 pathologists and radiologists alongside over 17,000 medical scientists, radiographers, sonographers, technicians, and nurses, underscoring its extensive reach and expertise.
Operating in countries such as Australia, New Zealand, the US, the UK, Switzerland, and Germany, Sonic Healthcare has demonstrated consistent growth. In FY25, the company reported an 8% increase in revenue to $9.6 billion, an 8% rise in operating profit (EBITDA) to $1.72 billion, a 7% growth in net profit to $514 million, and a 21% surge in operating cash flow to $1.3 billion.
“The ASX 200 share expects to grow its EBITDA by around 13% in FY26,” according to company forecasts.
Key growth drivers for Sonic Healthcare include ageing and expanding populations in its primary markets, the integration of AI technologies, strategic acquisitions, and the development of new pathology methods. These factors position the company for potential expansion and increased profitability over the next decade.
Temple & Webster Group Ltd: Innovating in Online Retail
Temple & Webster Group Ltd has carved out a niche in the retail sector with its capital-light business model. By offering a vast array of products online, many of which are shipped directly by suppliers, the company maximizes its product range while minimizing inventory costs.
The company’s FY25 results were impressive, with a 16% increase in active customers, a 21% rise in revenue to $601 million, and a 43% growth in operating profit (EBITDA) to $18.8 million. Notably, fixed costs as a percentage of revenue improved to 10.6%, down from 11.3% in FY24.
“Temple & Webster is tracking to plan across all of its long-term strategic goals, including its medium-term goal of at least $1 billion in annual revenue,” the company stated.
The Australian furniture and homewares market currently has a 20% online penetration rate, compared to 35% in the US and 29% in the UK, indicating significant room for growth. Temple & Webster aims to capitalize on this opportunity through trade and commercial sales, international expansion, and new ventures.
Looking Ahead: Growth Potential and Market Dynamics
Both Sonic Healthcare and Temple & Webster are well-positioned to leverage their respective markets’ dynamics. Sonic Healthcare’s focus on expanding its diagnostic services and embracing technological advancements could drive its growth trajectory. Meanwhile, Temple & Webster’s innovative approach to online retail and strategic expansion plans suggest a bright future.
As these companies continue to evolve, investors may find them appealing options for long-term portfolios. Their ability to adapt and grow in competitive environments highlights their potential to deliver substantial returns over the next decade.
In conclusion, while established giants may face growth constraints, emerging leaders like Sonic Healthcare and Temple & Webster offer compelling opportunities for investors seeking to capitalize on evolving market trends and technological advancements.
