• Is the Altium share price a buy at $36?

    Altium share price

    Is the Altium Limited (ASX: ALU) share price a buy at $36? I think the electronic PCB software business is a great company.

    Altium’s share price has been a strong performer over the past couple of months. Since 23 March 2020 the Altium share price has gone up by 45%. That’s strong gains if you bought at the time, but what about now?

    There are plenty of reasons to like Altium:

    Growing profit margins – A business can grow its profit faster than revenue if the profit margin can increase as economies of scale keep increasing. These are the types of businesses we want to have in our portfolio. Altium is a great example of this effect (in normal times).

    Strong balance sheet – It’s the businesses with a strong balance sheet that are able to cope with the coronavirus situation the best. Altium has no debt and a solid pile that was growing, until recently at least.

    Excellent management – I think the management is one of they key reasons the Altium share price has done so well over the past decade. They are long-term focused, set tough but attainable goals and are very considered with capital.

    Growing dividend – There aren’t many businesses that offer that attractive combination of fast growth and a growing dividend. Plenty of businesses retain all their profit for further growth. But a dividend is a nice way of getting returns without resorting to selling shares.

    So Altium’s share price is a buy today?

    I’m confident about Altium’s long-term future. The issue I see is the short-term. Altium has already warned that it’s having to reduce prices to continue to attract new subscribers. That’s the right thing for the long-term – prices can be increased in the future. But it will hurt Altium’s profit in FY20 and maybe even FY21.

    We don’t yet know how much profit pain that will entail. It’s true the Altium share price is being helped by the current ultra low interest rates. However, we should be cautious about businesses that are being priced with not much downside. I’d be interested if Altium’s share price was under $30, so I’m going to wait for a better buying opportunity.

    Some of the ASX’s other best growth shares could be better opportunities to buy today.

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    Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of Altium. 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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  • Oil drops after China abandons target for 2020 GDP amid coronavirus outbreak

    Oil drops after China abandons target for 2020 GDP amid coronavirus outbreakOil prices slumped on Friday after China’s decision to omit an economic growth target for 2020 renewed concerns that the fallout from the coronavirus pandemic will continue to depress fuel demand in the world’s second-largest oil user. Brent crude fell $1.56, or 4.3%, to $34.50 a barrel by 0323 GMT, after gaining nearly 1% on Thursday. West Texas Intermediate (WTI) crude dropped by $1.79, or 5.3%, to $32.13 a barrel, having gained more than 1% in the last session.

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  • Oil Retreats With Doubts Over China Eating Away at Weekly Gain

    Oil Retreats With Doubts Over China Eating Away at Weekly Gain(Bloomberg) — Oil retreated from the highest level in more than two months as doubts over the strength of China’s economic recovery and rising tensions between Washington and Beijing ate away at its weekly advance.Futures in New York fell around 5% toward $32 a barrel on Friday, but are still headed for a fourth consecutive weekly gain. Beijing said it wouldn’t set a gross domestic product target this year due to “great uncertainty” over the coronavirus, although it did announce some new stimulus spending. The question marks over China’s economy come as relations with the U.S. deteriorate, potentially complicating the global recovery from the pandemic.However, the backdrop for oil still looks promising as the market rebalances. U.S. drillers are in the process of curtailing 1.75 million barrels a day of existing production by early June, IHS Markit said. That’s on top of OPEC+’s agreement to curb almost 10 million barrels a day of output, which is being strictly adhered to after taking effect at the beginning of May.The cuts are eroding the stockpiles built up amid coronavirus lockdowns and the price war, with inventories at the U.S. storage hub at Cushing, Oklahoma, shrinking by the most on record last week. And while there are doubts over China, demand in Asia’s largest economy is almost back to pre-virus levels.Oil’s fast rebound has taken many in the market by surprise, especially given the path back to a full economic recovery looks to be long and uncertain and the risk of a second wave of the virus can’t be discounted. It’s also raised the possibility that U.S. shale producers will start to turn on the taps again and that the strict compliance with the OPEC+ agreement might break down.“The nascent demand recovery is still vulnerable, and the drop in prices today is an injection of reality,” said Victor Shum, vice president of energy consulting at IHS Markit in Singapore. “China not giving a GDP target means they are not quite certain about the recovery yet.”West Texas Intermediate crude for July delivery dropped 5.3% to $32.13 a barrel on the New York Mercantile Exchange as of 12:14 p.m. in Singapore. It rose 1.3% Thursday in a sixth straight gain. Brent for July settlement fell 3.7% to $34.71 on the ICE Futures Europe exchange and is up around 7% on-week.China’s oil demand earlier this month was probably at 92% of levels at the same time last year, IHS Markit said in a report. Full-year consumption is likely to be around 8% lower than in 2019, the energy consultant said.The oil industry will enter a structural phase of no production growth outside of OPEC starting next year, Goldman Sachs Group Inc. said in a note based on an analysis of upstream projects. OPEC may be required to supply as much as an additional 7 million barrels a day through to 2025 from pre-virus levels, while U.S. shale will emerge from the current slump as a lower growth and more cash generative industry, the bank said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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