Want to retire rich? There are some ASX 200 growth shares that could be exactly what you're after.
ASX 200 shares have been around long enough and may be big enough to safely weather any short-term economic downturn. They may also be at the point in their growth cycle where their scale means they're steadily growing profit margins.
Here are two ASX 200 growth shares that could help you become rich:
Challenger Ltd (ASX: CGF)
Challenger is the leading provider of annuities in Australia. It turns a retiree's capital into a guaranteed source of income for a fixed term or the life of the retiree.
The annuity leader is benefiting from its growing scale through additional distribution channels and higher assets under management (AUM), AUM grew by 16% last year to $81 billion. The earnings before interest and tax (EBIT) margin increased to 67.3% in FY18 from 66.6% in the prior year and the normalised cost to income ratio was 32.7%, which was an improvement of 70 basis points compared to FY17.
As Challenger's Australian annuity and Japanese annuity businesses continue to grow, margins may be able to keep growing too.
Challenger is trading at 13x FY19's estimated earnings with a grossed-up dividend yield of 5.5%.
Bapcor Ltd (ASX: BAP)
Bapcor is Australasia's leading auto parts business. Most people would know Bapcor for its nationwide chains of Bursons and Autobarns.
One of the main reasons why I'm attracted to Bapcor is its defensive earnings. Demand for car parts is relatively consistent year to year. Indeed, in an economic downturn demand for parts could increase if people decide to try to make their car last longer rather than buying a new (or used) car.
In FY18 Bapcor grew its continuing operations revenue by 22%, which was impressive. What helped profit grow even quicker was the gross margin increasing from 45.7% to 46% and the earnings before interest, tax, depreciation and amortisation (EBITDA) margin increasing from 11.6% to 12.1%.
With Bapcor planning to add dozens more Burson and Autobarn stores to its network over the next five years, it's easy to imagine that profit margins can grow even further.
As a bonus, the expansion into truck parts in Australia and opening Bursons in Asia could grow profit even quicker over the coming years.
Bapcor is trading at just over 19x FY18's earnings with a grossed-up dividend yield of 3.7%.
Foolish takeaway
Both of these businesses are increasingly profitable for each dollar of revenue they generate, which is very useful for shareholder returns. Both of them are trading at an attractive valuation with a decent income yield too. Bapcor may be the better bet for the next two to three years, but for an investment over 10 years I'm more attracted to Challenger for the ageing tailwinds.
