The Altium Limited (ASX: ALU) share price dropped sharply by more than 40% during the initial phase of the coronavirus pandemic from mid-February to mid-March. Since then its share price has regained just over half of those losses.

Altium has continued to perform reasonably well from a business perspective throughout the crisis, despite some short-term challenges.

Is the Altium share price a buy right now?

What is compelling about Altium’s business model?

Altium designs software which enables engineers to produce printed circuit boards for a broad range of electronic devices. These include everything from computers to cars and a growing range of devices that make up the ‘Internet of Things’.

Altium’s software tightly integrates into its customers’ systems and processes. This results in high customer switching costs. It also helps to lift Altium’s pricing power and recurring subscription revenue. In addition, Altium benefits from high product margins and operating leverage.

I feel that all of these factors make Altium an attractive share to invest in.

How has Altium performed recently?

In a May update, Altium informed the market that it may not reach its aspirational goal of US$200 million in total revenue during FY 2020. Altium still anticipates headwinds up to the end of June. Ongoing lockdown restrictions due to COVID-19 are having an impact in particular in the United States and Western Europe.

The company has also recently experienced challenges to sales, particularly at the smaller end of its target market. This includes signs of distress amongst some start-ups and other smaller customers.

However, on a positive note, the wider electronics industry appears to be holding up relatively well during the pandemic. Engineers have been utilising the excess time and capacity due to the slowdown in manufacturing to become more active in prototype designs. This trend is definitely benefiting Altium.

Altium continues to accelerate the rollout of its new Altium 365 cloud platform. It also reported that it remains in a strong financial position with a current cash balance in excess of US$77 million.

Is the Altium share price in the buy zone right now?

With Altium’s share price down significantly from pre-coronavirus levels, I think that this provides investors with a reasonably good buying opportunity. I believe that any further challenges that Altium may face are well factored into its current share price. In fact, I feel that the market may have over-exaggerated Altium’s current issues.

Altium’s long-term growth prospects continue to look attractive. The growing number of smart connected devices is likely to lead to continued demand for Altium’s products over the next decade.

More reading

• Why I think Xero shares are a great long-term buy
• How to become wealthy by investing $1,000 into ASX shares
• 3 ASX shares to buy and hold for the next decade
• Is the Altium share price the steal of the century?
• The most explosive ASX tech shares you can buy today

Phil Harpur owns shares of Altium. 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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If I had $500 to invest into my first ASX shares I’d pick one of the two ideas in this article.

Investing in ASX shares is one of the best ways to grow your wealth in my opinion. But it can be difficult to know where to start.

There are thousands of different things you can invest in on the ASX. You could pick an exchange-traded fund (ETF), a managed fund, a listed investment company (LIC) or go straight for individual shares.

I think diversification is important for beginner investors. If you invested your first $500 into Commonwealth Bank of Australia (ASX: CBA) shares then 100% of your portfolio would be in one share.

It could be a wise idea to choose an investment that provides good diversification straight away. Some investments give exposure to a portfolio with the one pick. That’s one of the main reasons why LICs are so attractive.

With that in mind, here are two ASX shares I’d happily buy with my first $500:

Share 1: MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is a great LIC run by Chris Mackay, the co-founder of Magellan Financial Group Ltd (ASX: MFG).

It aims to invest in great businesses listed internationally. Not many ASX shares would count among the best businesses in the world.

It’s invested in shares like Visa and Mastercard. Those two global payment businesses actually make up around a third of the portfolio. I think they have good growth runways with the shift away from physical cash payments to online shopping and contactless payments.

MFF Capital has been a solid ASX share over the past five years. The MFF Capital share price has risen by 54% since June 2015 despite the big selloff caused by COVID-19.

I think MFF Capital is worth owning because it has a diversified portfolio. Some of its other investments include Home Depot, CVS Health, Microsoft and some international banks.

At the end of May 2020 MFF Capital’s portfolio was 46.4% net cash. That means it’s well protected if the market were to fall again. It also means it has a good cash pile to buy beaten-up shares if that opportunity comes.

Share 2: Future Generation Global Invstmnt Co Ltd (ASX: FGG)

Future Generation Global is another overseas-focused LIC. The ASX share invested in a range of funds that invest in overseas shares. The fund managers of those funds work for free so that Future Generation Global can donate 1% of its net assets per year to youth mental health charities.

Some of the fund managers it’s invested with include Magellan, Cooper Investors, Marsico Capital Management, Caledonia and Munro Partners. Each fund manager’s fund comes with its own portfolio of shares. So Future Generation Global’s underlying portfolio is very diversified.

At the end of May 2020, Future Generation Global’s gross investment performance was showing a clear outperformance of the MSCI AC World Index (AUD). Over the past three years, Future Generation Global’s 10.9% per annum portfolio performance outperformed the index by 1.7% per annum. Over the prior six months the index declined 4.2% whilst the Future Generation Global portfolio returned 1.2%.

If you’re looking to buy the shares at a good price then you’re in luck. The May 2020 net tangible assets (NTA) per share was almost $1.48, which compares to today’s share price of $1.16. That’s a 22% discount, which is very large considering the regular outperformance.

Foolish takeaway

I really like both of these ASX shares for the global exposure they provide, the quality investors involved and the attractive valuation on offer. At the current prices it’s hard to pick a favourite, I’d really like to buy both.

More reading

• Got $20,000? These are the ASX shares I’d buy during COVID-19
• Is this the start of a second COVID-19 share market crash?
• These ASX shares are the best way to invest overseas
• 3 ASX shares to buy for the big shift to contactless payments
• How to become a millionaire before your parents with ASX shares

Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd. 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.

The post I’d invest my first $500 into 1 of these 2 ASX shares appeared first on Motley Fool Australia.

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