While attempting to get rich by day trading can be tempting, it is worth remembering that statistically it creates far more losers than winners.
In light of this, I believe that if you’re interested in building your wealth, you should focus on buying and holding ASX shares over the long term.
But which shares should you buy? While there are a number of quality options on the ASX, I think Altium Limited (ASX: ALU) shares are up there with the best of the best.
What is Altium?
Altium is the company behind leading printed circuit board (PCB) design software platform, Altium Designer. It also has a number of complementary businesses such as the Octopart electronic and industrial parts search engine and the NEXUS design collaboration panel.
While its performance in FY 2020 has been disappointing given its impressive growth in recent years, it is worth noting that this is entirely down to the coronavirus pandemic. Take that out of the equation and Altium would almost certainly have smashed expectations again this year.
In light of this, I believe investors should look beyond this short term weakness and focus on its strong long term growth potential.
This is thanks to its exposure to the Internet of Things market which continues to grow at a rapid rate. As the majority of connected devices require PCBs inside them to function, demand for Altium’s software looks set to continue to increase.
Management certainly believes this will be the case and continues with its aspirational revenue target of US$500 million by FY 2025. This is almost triple FY 2019’s revenue of US$171.8 million.
If it achieves this, which I believe it will, I expect it to lead to very strong earnings and dividend growth as it scales.
All in all, I think this makes the recent weakness in the Altium share price a buying opportunity for investors.
5 stocks under $5
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- Fund managers have been buying Costa and this ASX 200 share
- 3 ASX dividend shares growing their payouts fast
- Altium and these ASX 200 shares could be quality buy and hold options
- 3 of the best ASX tech shares to buy in July
- 2 ASX shares I would buy for growth and income
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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