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  • Should you invest $1,000 in Altium shares today?

    Circuit board, Altium shares

    Altium Limited (ASX: ALU) shares have edged 5.41% higher this year, but is the Aussie tech company in the buy zone?

    What’s happened to Altium shares in 2020?

    The Aussie tech share started the year in typically strong fashion. In fact, Altium hit a new 52-week high of $42.76 as recently as February 17. There’s been quite a bit of downhill from there with Altium shares bottoming at a 52-week low of $23.11 on March 23.

    Unsurprisingly, Altium was not the only WAAAX share to fall lower in March. Even Afterpay Ltd (ASX: APT) shares fell to $8.90 but have since bounced back to over $46 per share. 

    The Aussie-American software business focuses on electronic design systems for 3D printed circuit boards (PCBs). However, many of the company’s small and medium enterprise (SME) business customers have been short on cash amid the pandemic.

    Altium shares have made a recovery since their March lows, and are trading at $36.60 per share right now. That’s despite the recent business update announcing some headwinds for the tech group.

    Altium has launched ‘attractive pricing’ and extended payment terms to drive volume. This means that while volume should increase, the price component is likely to drive down revenue and cash flow in the short-term.

    However, it’s not all doom and gloom for the software company. Altium’s push for more volume could drive market share and position it as a clear market leader in the medium to long-term.

    With a strong cash balance and clear strategic goals, Altium shares could be on the move again in 2020.

    There’s also something to be said for a strong US presence. The nature of the pandemic has forced many countries to look internally for business growth.

    Altium could be well-placed to drive further change in both Australia and the United States thanks to its unique market positioning.

    Foolish takeaway

    No one knows where Altium shares are headed in 2020, but I feel the company’s long-term outlook still looks good. I think it could be a good value ASX tech share to buy if you want to boost your portfolio growth potential.

    If Altium isn’t in your buy zone, check out this top growth share with an all-in buy alert today!

    One “All In” ASX Buy Alert, that could be one of our greatest discoveries

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and 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.

    The post Should you invest $1,000 in Altium shares today? appeared first on Motley Fool Australia.

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  • Europe’s Debt Reckoning May Mean Tough Choices on Who to Tax

    Europe’s Debt Reckoning May Mean Tough Choices on Who to Tax(Bloomberg) — Europe’s leaders may be united on the need to throw money at economies during the coronavirus crisis, but they have yet to confront how to pay for it all.That reckoning could force governments across the region into tough choices about where to lay the burden among voters already disillusioned with political establishments — a decade after the global financial crisis presented them with previous bills to settle.Europe’s austerity experiments since then, from Greece to the U.K., provide cautionary tales of either the economic damage or electoral fatigue that spending cuts can cause. With those bitter experiences in mind, politicians are already fielding questions about tax hikes on either wealth or income — even if they too might threaten to hurt growth.Alternatives include tolerating higher debts such as Japan does, or perhaps trying to inflict a dose of inflation to erode them away — itself a tax of sorts. With sovereign borrowing costs historically low, such approaches may look tempting as the bills rack up fast. Debt ratios in the euro area and U.K. may top the 100% milestone this year.“There are very few easy or politically attractive ways to deal with this,” said James Athey, a money manager at Aberdeen Standard Investments. “The ideal way to pay for this is to generate growth that’s higher than your cost of funding. Unfortunately, I think that’s going to be very difficult.”As European governments rapidly ramp up borrowing to aid economies, the region’s experience of austerity is framing the debate on how to tackle debt. Applying such medicine too forcefully in Greece in 2010 led the International Monetary Fund to conclude that it had caused more harm than good to public finances and growth.In the U.K., whose 2010 deficit also ballooned to a Greek-like level, austerity under former Prime Minister David Cameron coincided with years of negligible growth. Whether or not that followed from spending cuts, it did fuel discontent that contributed to his political demise when the country voted to leave the European Union.“European governments got worried about the large increase in debt and shifted to fiscal austerity, probably excessively slowing the recovery,” said former IMF Chief Economist Olivier Blanchard.One discussion in Europe is whether taxes should rise when the recovery takes hold. Switzerland’s Social Democrats want higher income taxes, and the U.K. media is also awash with speculation about potential tax increases.A further argument is focused on wealth taxes. The minority partner in Spain’s coalition is mulling such a proposal, while in France, where the government recently reduced wealth tax, economist Thomas Piketty says history shows such measures are the best way of bringing down huge public debt. Camille Landais, a professor of economics at the London School of Economics, even suggests a time-limited, Europe-wide wealth tax.“If there needs to be some form of mild rebalancing of public finances it must be in a way that is fair, and essentially targets individuals that are most able to weather this,” said Landais.German Chancellor Angela Merkel has already been forced to deny any plans for higher taxes for now, while French Finance Minister Bruno Le Maire said he doesn’t want to reapply the country’s levy on wealth. Athey says such reactions are understandable.“The notion of raising taxes that don’t retard growth is very difficult,” he said.The crisis may also reignite calls to change the mindset in the euro zone at least, where German-stipulated limits on deficits and debt were cemented into its monetary union. In Japan and the U.S., higher outright debt loads are accepted for longer while governments stabilize spending and curb borrowings through economic growth, conveniently shifting some of the burden to future generations of politicians too.Helping governments to keep debt costs under control are the actions of central banks. Their hoovering up of bonds has largely removed concerns over spiralling borrowing costs which dominated the early 2010s, and provide a foundation for public finances to start fixing themselves.“The only sensible way out of over-indebtedness or high debts is more economic dynamism,” Marcel Fratzscher, President of DIW German Institute for Economic Research, said this month. “That’s the lesson after the global financial crisis.”Central banks may also face pressure from governments to keep monetary policy loose for longer, tolerating inflation that erodes the value of government debts — a tactic that helped the U.K. to bring its borrowings under control in the era after World War II.Inflation, while long craved by monetary authorities since the financial crisis, would also hurt savings and evoke painful memories for some countries, from Germany in the 1930s to the U.K. in the 1970s. Fratzscher says that as a policy to reduce debt, it’s “damaging.”But what if debt just can’t be brought under control? William White, a senior fellow at the C.D. Howe Institute in Toronto and a former chief economist at the Bank for International Settlements, says that outcome is a real possibility.“We’re on a bad path here of debt accumulation,” he said. “Thinking much more seriously about debt restructuring in an orderly way is required.”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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  • 3 commodity trends to watch this week

    ASX share

    In a country like ours it pays to be aware of the underlying commodity trends. This is more true today than at any other time as the world awakes from the coronavirus pandemic to a world fraught with tension. I have found that if you pay attention, and understand the way things are moving there is always a chance to profit. 

    Gold miners

    The gold price is the king of all commodity trends. It remains at an all time high in Australian dollars. Recent falls have been more influenced by the exchange rate with the US dollar than giant swings in the gold price. The easy analysis is to say gold is a hedge against uncertainty. An asset that rises when equities fall. However, there is more to it than that. 

    Record low interest rates, even negative interest rates, around the world have combined with immense levels of quantitative easing. This means more available cash. Where there is a high demand, like investment assets, we see inflationary pressures. 

    Within this space there are still S&P/ASX 200 (INDEXASX: XJO) shares selling at reasonable prices. The Regis Resources Limited (ASX: RRL) share price fell by 5.5% last week for no discernible reason. The company has maintained a 9-year compound annual growth rate for sales at 22%. An 8-year earnings per share CAGR at 17.2% and a share price CAGR at 22.9%.

    Battery Metals

    Rumours this week that Tesla Inc (NYSE: TSLA) had developed a million mile battery caused a lot of speculation.  Including a claim from General Motors Company (NYSE: GMC) that they too had almost completed a million mile battery. This means a renewed upward commodity trend for future facing metals such as nickel, silver, and copper in particular. Companies like BHP Group Ltd (ASX: BHP) and Sandfire Resources Ltd (ASX: SFR) are ASX 200 shares that may benefit from any rise in the copper price, with BHP also heavily involved in global nickel production.

    South32 Ltd (ASX: S32) is a large scale player in the nickel industry. It is also a high volume producer of silver from the Cannington mine in Queensland. Both of these are used on battery manufacture as well as across the board in the renewables sector. 

    Grain industry

    The upward commodity trend in grain has continued despite the Chinese 80% tariffs. The share price of Australian producer Graincorp Ltd (ASX: GNC) has continued its upward momentum. GrainCorp is not very exposed to the tariffs imposed thus far.

    Food security is quietly becoming a very important issue. Over the past three months we have seen the worst locust plagues for a generation across Africa, The Middle East and South Asia. Ukraine, the food bowl of Europe, is also expecting a markedly lower harvest in 20/21 after a record crop in 19/20. Moreover, the UN has raised the spectre of starvation at “biblical” levels.

    Download our expert report on 5 shares likely to be big winners after Covid-19.

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    Daryl Mather 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 Tesla. 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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