The Altium Limited (ASX: ALU) share price was a positive performer on Monday and pushed higher following its full year results release.
The electronic design software company’s shares ended the day almost 1.5% higher at $33.92.
Is it too late to buy Altium shares?
I don’t believe for a second that it is too late to buy Altium shares.
In fact, I continue to believe that it remains one of the best buy and hold options on the local market. Here are three reasons why:
Favourable tailwinds.
Altium’s electronic design software platform and businesses are benefiting from very favourable tailwinds at present. The rapidly growing Internet of Things and artificial intelligence markets are underpinning the proliferation of electronic devices globally and driving strong demand for its offering. The good news is that these tailwinds are only just building and Altium looks set to have the wind in its sails for a long time to come.
Positive long term growth potential.
In FY 2020 Altium achieved revenue growth of 10% to US$189 million despite the negative impact of the pandemic on its end of year sales. Pleasingly, given the aforementioned tailwinds, Altium’s growth isn’t expected to stop any time soon. This morning management revealed that it remains committed to its 2025 target of US$500 million in revenue. And while it acknowledges that the pandemic could delay it achieving this by 6-12 months, it appears confident it will get there.
Market dominance.
As well as targeting US$500 million in revenue by 2025, the company is aiming to grow its active subscribers to 100,000. This will be up from 51,006 in FY 2020. Management believes that if it achieves this it will have market domination and be in a position to compel key industry stakeholders to support its agenda to transform electronic design and its realisation. This will then leave Altium well-placed to start the next level of its growth.
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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 and recommends 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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