Author: therawinformant

Every so often I like to take a look to see how investments in initial public offerings (IPOs) would have fared.

On this occasion, I’m going to take a look at electronic design software company Altium Limited (ASX: ALU).

When did Altium launch its IPO?

You might be surprised to learn that Altium isn’t a new listing and has actually been trading on the Australian share market for over two decades.

In fact, Altium wasn’t even known as Altium when it first landed on the ASX boards. In August 1999, it listed on the share market as Protel Systems, raising $30 million at $2.00 per share.

By many measures, the Altium/Protel IPO was a huge flop and a series of failures led to the Altium share price falling very heavily over the first couple of years.

So much so, the Altium share price at one stage dropped as low as 9 cents in 2011. That represents a 95.5% decline from its IPO price.

But anyone that stuck with the company through its hard times certainly has been rewarded today.

Thanks to a series of successful acquisitions that have transformed the company into the leading player in the industry, the Altium share price is now fetching $35.40.

This means that if you had invested $10,000 into the Altium IPO in 1999, you would have received 5,000 shares. These shares would now have a market value of $177,000.

In addition to this, in FY 2021 the company is forecast to pay shareholders dividends of 40 cents per share. Which means that those 5,000 shares would generate dividends of $2,000. This represents a yield on cost of 20%.

But perhaps the best thing is the company’s outlook. Due to the Internet of Things and artificial intelligence markets driving strong demand for its services, I believe Altium is well-positioned to generate very strong returns for investors over the next 20 years.

Combined with the power of compounding, I suspect these 5,000 shares will be worth significantly more than $177,000 in 2030 and 2040.

Foolish Takeaway.

The Altium IPO has proven to be a very successful one, but it did go through a number of ups and (mostly) downs before getting there.

I believe this demonstrates both the risks and rewards of investing in IPOs. Things have worked out for Altium and its shareholders, but it could have been a very different story if it were not for its game-changing acquisitions.

In light of this, I think investors looking to invest in IPOs should consider companies which are already positioned for long term growth and won’t require acquisitions to get them there.

More reading

• 2 exciting ASX tech shares to buy and hold for a decade
• Altium (ASX:ALU) updates market on restructure
• ASX 200 jumps 2.6%, big 4 banks surge
• 2 outstanding ASX tech shares to buy for the long term
• 3 ASX shares I’d buy if the share market crashes again

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.

The post $10,000 invested in the Altium (ASX:ALU) IPO is worth how much now? appeared first on Motley Fool Australia.

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ASX gold shares were on fire on Tuesday as Saracen Mineral Holdings Limited (ASX: SAR) and Northern Star Resources Ltd (ASX: NST) announced a new mega merger. That’s good news for shareholders in those companies, but what does it mean for the Newcrest Mining Limited (ASX: NCM) share price?

What was announced on Tuesday?

Northern Star and Saracen are set to combine forces under a $16 billion merger of equals. The merger would form a top 10 global gold company with target production of 2 million ounces of gold per year.

This is the latest step in the companies’ relationship after both become 50% joint venture partners in the Kalgoorlie Super Pit Mine.

Northern Star will acquire 100% of Saracen shares for 0.3763 Northern Star shares for each Saracen share to form the new company.

Both companies’ boards have supported the move as a way to unlock more value and give Saracen broader international reach.

What does this mean for the Newcrest share price?

The Newcrest share price closed 0.2% lower following Tuesday’s news. Clearly, a bigger, badder ASX gold company isn’t good news for Newcrest’s position as top dog.

However, I don’t think there is too much to fear from the planned merger. Newcrest is still Australia’s largest gold producer and will continue to be after the merger.

However, there are a couple of issues that might weigh on the Newcrest share price. One is potentially higher supply which may impact on gold prices.

I’m not sure that’s too much of a problem given the company’s target 2 million ounces per year production level. There’s also a potential threat to Newcrest’s status as the leading Aussie gold producer around the globe.

I think that’s what is weighing on investors’ minds as the Newcrest share price closed slightly lower on Tuesday. 

Foolish takeaway

It’s still too early to determine what the impact of the merger will be on the Newcrest share price as well as its market share and profits.

I don’t think it’s particularly good news but it may not be too much of an issue given Newcrest’s scale and dominance.

More reading

• ASX 200 rises on mixed day, big gold merger
• ASX 200 down 0.2%: Northern Star & Saracen announce mega merger, IAG settles class action
• Why Baby Bunting, Northern Star, Oil Search, & Telix shares are storming higher
• Northern Star (ASX:NST) and Saracen (ASX:SAR) announce mega merger
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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 Will the Newcrest (ASX:NCM) share price fall after the Saracen merger? appeared first on Motley Fool Australia.

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Investors in ASX shares have a lot to like about last night’s Federal Budget. Tax cuts and monetary incentives look set to boost profits and encourage business activity in 2021.

Why the Federal Budget is good for ASX shares

There were some clear winners from last night’s budget announcement by Treasurer Josh Frydenberg.

These include construction leaders like Mirvac Group (ASX: MGR) with further infrastructure spending. There were also coronavirus-related companies like CSL Limited (ASX: CSL) that could receive a boost alongside innovation companies in the fintech space.

But there are also the generic tax cuts that will sweep across most of corporate Australia. For one thing, the government wants to spark more capital expenditure by allowing full expensing of ‘eligible capital assets’. 

That could trigger a spending spree that boosts ASX shares higher. More long-term investment is good for growth provided the assets deliver future benefits.

There’s also the microeconomic impacts we could see flow through to earnings. These include a big boost for consumer discretionary shares with $17.8 billion in personal income tax cuts.

The government is hoping more handouts and bigger tax cuts will stimulate greater spending. That could see ASX retail shares like JB Hi-Fi Limited (ASX: JBH) and Super Retail Group Ltd (ASX: SUL) continue to book strong sales.

Looking even further upstream, we arrive at the ASX bank shares. I think investors in the Aussie banks would have to be happy with this budget and we could see shares like Commonwealth Bank of Australia (ASX: CBA) climb higher.

A stronger economy and lower unemployment, also boosted by incentives in the latest budget, are good for banks. These mean lower default rates and better loan quality which is good for investors.

Foolish takeaway

Overall, I feel this was a very ‘business-friendly’ Federal Budget given the sweeping tax cuts and government spending across the economy.

For investors worried about buying into ASX shares right now, I think this sends a strong signal that corporate Australia could bounce back strongly in coming years.

More reading

• Why the JB Hi-Fi (ASX:JBH) share price could soar into Christmas
• Why the Coles Group (ASX:COL) share price just got upgraded to “buy”
• Why I would buy CSL (ASX:CSL) and this blue chip ASX share
• Here’s where you could invest your Woolworths (ASX:WOW) dividends today
• Which ASX banking share is the cheapest today?

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. 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 Why this Federal Budget is good for many ASX shares appeared first on Motley Fool Australia.

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Vanguard US Total Market Shares Index ETF (ASX: VTS) is a popular investment option for many Aussies. Is it one of the best exchange-traded funds (ETFs)?

A quick overview of Vanguard US Total Market Shares Index ETF

This ETF is provided by Vanguard, one of the world’s best operators. Vanguard is owned by its investors, it shares its profit by lowering management fees further if it can. It is one of the cheapest ETF providers in the world.

Vanguard US Total Market Shares Index ETF aims to give investors exposure to the American share market. The US is where many of the world’s best businesses are based, so this ETF gives access to many of those top names like Apple, Microsoft, Amazon, Alphabet, Facebook, Berkshire Hathaway, Visa and Mastercard.

Whilst the biggest businesses get the largest allocation in the ETF, it actually has around 3,500 investment positions – making it very diverse in terms of the number of holdings.

Vanguard US Total Market Shares Index ETF has an annual management fee of 0.03%, which is one of the cheapest available to Aussies. Extremely low fees are great because it leaves nearly all of the returns in the hands of the investor.

Positives

The biggest positive has been the returns, which is ultimately what investing is all about. Over the past three years its net returns have been an average of 16.6% per annum. Over the past decade it has returned 17.1% per annum.

That level of return shows how good the underlying businesses in its portfolio are. The strength of those large tech shares has been undeniable. They seem unstoppable looking into the foreseeable future, unless there is some sort of government or regulation interference.

People may think of this ETF as a US one, but you have to remember that many of the larger businesses generate earnings from across the world. This is largely a global portfolio when you look at the underlying earnings of the holdings.

Vanguard US Total Market Shares Index ETF has an extremely low fee. Whilst 0.20% of fees or even 1% may not seem like much in one year, it can make a big difference over several years when compounding takes effect.

Many of the world’s most promising businesses choose to list in the US, so this ETF will likely always have good growth potential.

Negatives

There aren’t many negatives with this ETF. But there are a few if you try to find them.

Vanguard US Total Market Shares Index ETF’s dividend yield is pretty low at just 1.6%. Several of the ETF’s largest holdings like Amazon, Alphabet, Facebook, Berkshire Hathaway and Tesla don’t pay a dividend. The valuation of the ETF has risen strongly too, pushing down the potential yield. But more growth is a good alternative. 

Indeed, that valuation for Vanguard US Total Market Shares Index ETF now stands with a price/earnings ratio of 27.5x. That’s pretty hefty when you compare that to the ASX, European shares or even Asia.

The ETF offers plenty of diversification, but by being a US ETF you miss out on plenty of quality global shares like AMSL, LVMH, Tencent, Alibaba and so on. But global ETFs cost a bit more in fees, so it’s a balance of finding the right mix.

There is also the consideration of currency risks. It can add a risk to your investing when you invest in businesses that earns in different dollars and are traded in different currencies. It’s better to buy overseas shares when the Australian dollar is high. The Australian dollar is quite when when compared to the US dollar over the last couple of years. But when the Australian dollar falls it becomes more expensive to buy American shares.

I also think that the US election may cause uncertainty over the next few months, so if you’re thinking about investing, it may help to wait a few weeks first.

Foolish takeaway

Vanguard US Total Market Shares Index ETF is one of the best ETFs around in my opinion. It generates good returns with very low costs. It gives exposure to some of the best businesses in the world. However, as someone who is willing to invest any type of investment on the ASX, I’m not jumping today because the US share market has run hard, looks a bit expensive and the election could be bumpy. But if you just invest in ETFs, I think this is one of the best ones to regularly invest in. 

More reading

• Here are the 10 most popular ETFs on the ASX
• Want to invest in US shares? This ETF is a top option
• 2 ultra-cheap ASX ETFs any investor can add to a share portfolio
• The 3 best ETFs for passive investing

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 you’re looking to boost your income with some ASX dividend shares, then I think the ones listed below would be worth considering.

I believe both companies are in a good position to pay more generous dividends in FY 2021 and beyond. Here’s why I would buy them:

Aventus Group (ASX: AVN)

The first ASX dividend share to look at is retail property company Aventus. It has been a remarkably positive performer during the pandemic when many of its peers have struggled. This has been thanks to its focus on large format retail parks and the high weighting of its tenancies towards everyday needs. Aventus counts the likes of ALDI, Bunnings, Officeworks, and The Good Guys as tenants.

Given how these companies have continued to thrive during the pandemic, its rental collections were solid in FY 2020 and look likely to be equally strong this year. In light of this and based on the current Aventus share price, I estimate that it provides investors with an FY 2021 dividend yield of ~5.5%.

Fortescue Metals Group Limited (ASX: FMG)

Another ASX dividend share to consider buying is Fortescue. I think the iron ore producer would be a great option due to the high prices that the steel making ingredient is commanding this year. And thanks to an improving outlook for steel production in China, these lofty iron ore prices look likely to stay in or around current levels for longer.

Combined with its low cost operations, this should put Fortescue in a position to deliver high levels of free cash flow again in FY 2021. Pleasingly, given the strength of its balance sheet, I expect the majority of this free cash flow to be returned to shareholders. Which, based on the current Fortescue share price, I estimate will lead to a fully franked dividend yield of at least 6% this year.

More reading

• My 3 favourite ASX dividend shares to buy this year
• Top brokers name 3 ASX shares to buy next week
• Why Beach, Fortescue, Mesoblast, & SeaLink shares are tumbling lower
• How to generate $50k a year from ASX dividends
• Top ASX Stock Picks for October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 Buy Fortescue (ASX:FMG) and this ASX dividend share for income appeared first on Motley Fool Australia.

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The Australian share market has been a very positive performer this week and is charging notably higher week to date.

And while the All Ordinaries Index (ASX: XAO) is still down materially from its pre-pandemic high, that hasn’t stopped some ASX shares from charging to new highs.

Three ASX shares which have just hit record highs are listed below. Here’s why they are soaring:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price jumped to a new record high of $4.96 on Tuesday. Investors were buying the baby products retailer’s shares after the release of a trading update ahead of its annual general meeting. That update revealed that Baby Bunting’s positive form has continued in FY 2021, with comparable store sales growth (to 2 October) of 17%. Excluding stores in the Melbourne metropolitan region, the company’s comparable store sales would have been up 28.5%. Management also revealed very strong online sales and click & collect growth.

Objective Corporation Limited (ASX: OCL)

The Objective Corp share price reached a record high of $13.20 yesterday. This latest gain means that the content, collaboration, and process management software solutions company’s shares have now more than doubled in value in 2020. The catalyst for this was its strong performance in FY 2020, which led to Objective Corp delivering a 22% lift in net profit after tax to $11 million. Also getting investors excited was management’s guidance for the year ahead. It expects “a material lift in revenue and profitability” in FY 2021.

Piedmont Lithium Ltd (ASX: PLL)

The Piedmont Lithium share price surged to a new high of 48 cents on Tuesday. Investors have been buying this U.S. based lithium miner’s shares after the release of a major announcement at the end of September. That announcement revealed that Piedmont Lithium has signed a binding sales agreement with electric vehicles giant Tesla. The two parties have signed an initial five-year term for the supply of spodumene concentrate (SC6) from Piedmont Lithium’s North Carolina deposit. The deal also includes the option for a further five-year extension by mutual agreement.

More reading

• Why Baby Bunting, Northern Star, Oil Search, & Telix shares are storming higher
• Meet the latest ASX small cap stock that’s racing ahead during COVID
• Baby Bunting (ASX:BBN) share price on watch after very strong Q1 sales growth
• Could these US-based ASX lithium shares land a deal with Tesla (NASDAQ:TSLA)? 
• Forget day trading and buy and hold these fantastic ASX shares

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 Objective Limited. 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 Why Piedmont Lithium (ASX:PLL) and these ASX shares just hit new highs appeared first on Motley Fool Australia.

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On Tuesday the S&P/ASX 200 Index (ASX: XJO) fought back from a morning decline to continue its positive run. The benchmark index rose 0.35% to 5,962.1 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to drop lower.

The ASX 200 looks set to end its winning streak on Wednesday. According to the latest SPI futures, the benchmark index is poised to open the day 8 points or 0.1% lower. This follows a poor night of trade on Wall Street. Late in the session the Dow Jones is down 1.1%, the S&P 500 is 1.1% lower, and the Nasdaq is tumbling 1.2% lower. News that President Trump is calling off COVID-19 stimulus talks until after the election led to the selloff.

Federal Budget reaction.

A number of ASX 200 shares will be on watch today after the release of the Federal Budget last night. Retail shares may be among the biggest winners after the government cut personal tax rates to put more funds in consumers’ pockets. Elsewhere, R&D tax incentives have been left untouched, manufacturers have been allocated $1.5 billion in grants, and states have been given $10 billion to boost infrastructure projects. All in all, Australia’s debt is expected to reach almost $1 trillion in the coming years.

Oil prices storm higher.

Energy shares including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could push higher again on Wednesday after oil prices continued their recovery. According to Bloomberg, the WTI crude oil price is up 2% to US$40.01 a barrel and the Brent crude oil price is up 2% to US$42.10 a barrel. Traders were buying oil amid supply disruptions due to an approaching hurricane on the Gulf Coast.

Gold price sinks lower.

Gold miners Evolution Mining Ltd (ASX: EVN) and St Barbara Ltd (ASX: SBM) could have a tough day ahead after the gold price sank lower. According to CNBC, the spot gold price has fallen 1.15% to US$1,898.10 an ounce. The price of the precious metal came under pressure after U.S. Treasury yields climbed.

BHP rated as a buy.

The BHP Group Ltd (ASX: BHP) share price will be on watch after analysts at Goldman Sachs reiterated their buy rating and $40.10 price target on the mining giant’s shares. The broker notes that BHP has acquired a greater share of the Shenzi asset in the Gulf of Mexico. Based on Goldman Sachs’ long run oil prices of US$60 a barrel, it expects the acquisition to be highly accretive to earnings.

More reading

• ASX 200 rises on mixed day, big gold merger
• Why the Coles Group (ASX:COL) share price just got upgraded to “buy”
• What investors learnt from the RBA’s rate decision today
• Does time in the market really beat timing the market?
• ASX 200 down 0.2%: Northern Star & Saracen announce mega merger, IAG settles class action

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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Despite trading notably lower than its 52-week high, the Appen Ltd (ASX: APX) share price has been a market beater in 2020.

Since the start of the year, the machine learning and artificial intelligence data services company’s shares have risen a remarkable 55%.

Why is the Appen share price up 55% in 2020?

Investors have been buying Appen’s shares this year after it delivered further strong growth in FY 2020 despite the pandemic.

For the six months ended 30 June 2020, Appen reported a 25% increase in revenue to $306.2 million.

This was driven by the company’s key Relevance segment, which provides annotated data to be used in search technology for improving the relevance and accuracy of search engines, social media applications, and e-commerce websites.

The Relevance segment posted a 34% increase in revenue to $273.9 million during the first half. This offset weakness in the company’s Speech & Image segment, which reported a disappointing 20% decline in revenue to $31.9 million.

Also growing strongly was the company’s operating earnings. Appen reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) excluding growth investments of $62.5 million, up 35% on the prior corresponding period.

What about the future?

The good news is that management remains very positive on the company’s outlook. It noted that it is has high confidence in the long-term market potential for AI and training data.

Chairman, Chris Vonwiller, commented: “We are especially pleased with this result amidst the pandemic and the implementation of our growth initiatives. The strength of our business model, market exposure, competitive position and our consistent execution give us the confidence to push forward with our investments to solidify future growth.”

Should you invest?

At present, I estimate that Appen’s shares are changing hands at 39x FY 2021 earnings.

While this is a premium to the market average, it is actually very reasonable in comparison to other members of the WAAAX group, such as WiseTech Global Ltd (ASX: WTC). I estimate that its shares are trading at 94x FY 2021 earnings at present.

Overall, I think the Appen share price is a strong buy at the current level and expect its market beating return to continue over the 2020s.

More reading

• 4 stellar ASX growth shares to buy right now
• Where to invest $10,000 into ASX shares immediately
• 5 things to watch on the ASX 200 on Friday
• One ASX tech share to buy today ahead of government cash splash
• Where to invest your Coles (ASX:COL) dividends this week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd and WiseTech Global. 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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The JB Hi-Fi Limited (ASX: JBH) share price is up 23% so far in 2020, even after sliding 10% from its 25 August all-time highs. Despite its unique spot in the retailing world, with a large online footprint, the JB share price did not escape the wider selling that gripped the market in the early days of the pandemic. From 10 February through to 25 March the JB share price fell 47%.

Since that low, the share price has doubled, up 100%. That strong performance puts the company’s shares up 23% year to date. By comparison, the S&P/ASX 200 Index (ASX: XJO) is down 11% in 2020.

What does JB Hi-Fi do?

JB Hi-Fi is a consumer goods retailer. The company’s products include a range of home entertainment, gaming, music and IT products as well as white goods and home appliances. JB has made several acquisitions over the years, including acquiring The Good Guys in 2016.

JB Hi-Fi has over 300 stores across Australia and New Zealand. The company also operates online stores in both markets. JB Hi-Fi first began trading on the ASX in 2003. Today, the company has a market capitalisation of $5.4 billion and pays an annual dividend yield of 4%, fully franked.

Why the JB share price could run higher into Christmas

There are good reasons to believe that JB Hi-Fi’s share price could top the record high set on 25 August. That would represent a gain of 11% or more from today’s price of $47.04 per share (at the time of writing).

First, it’s a well managed company with strong sales growth. Total sales growth in the 2020 financial year came in at 11.6%. And the 2021 financial year is off to a good start, with the company reporting total sales growth in its Australian businesses of 42% in July, the first month of the new financial year.

Then there’s the government’s new, big spending budget, the finer details of which will be released shortly. Among the other spending packages, the budget is bringing forward the government’s stage 2 income tax cuts, and making them retroactive.

This, alongside other stimulus measures to support businesses and households, is going to put a lot of unexpected money into most households’ pockets. And with the Christmas season coming up, I expect COVID weary consumers will be looking to spend big to usher in the holiday cheer.

All this could spell a big uptick in the JB Hi-Fi share price.

More reading

• 3 ASX shares poised for huge growth in FY21
• Can the Harvey Norman (ASX:HVN) share price maintain its momentum?
• Top brokers name 3 ASX shares to buy next week
• Brokers upgraded JB Hi-Fi (ASX:JBH) share price and this other ASX stock to “buy” today
• 3 ASX shares with high-flying dividend yields

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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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I think that one of the best ways to generate wealth is to invest with a long-term view.

After all, over the last 30 years the Australian share market has generated an average return of 8.76% per annum according to research by Fidelity.

This means that a single $20,000 investment would now have grown to be worth almost $250,000 if it earned the market return over the last three decades. I believe this demonstrates the power of investing with a long term view.

With that in mind, here are two top ASX shares that I think would be great buy and hold investments:

Altium Limited (ASX: ALU)

I think that Altium is one of the best buy and hold options on the Australian share market. This is because I believe the electronic design software company is well-positioned to grow its earnings at an above-average rate for a long time to come thanks to its platform’s exposure to the Internet of Things and AI booms.

But Altium certainly isn’t a one trick pony. In addition to its design software, the company has a number of other growing businesses such as Nexus and Octopart. The latter business in particular appears underappreciated by the market. Octopart is a search engine for electronic and industrial parts which aggregates parts from distributors and manufacturers online. This makes them easy to search for and purchase. It has a large market opportunity and could be a key contributor to its revenue growth over the 2020s.

Nearmap Ltd (ASX: NEA)

Another ASX tech share to consider buying is this aerial imagery technology and location data company. Nearmap has been growing at a very quick rate over the last few years thanks to the increasing demand for its services in both Australia and North America. And while its performance in FY 2020 was a touch underwhelming because of a large customer churn event (not competition related), I’m confident that this was just a one-off and out of Nearmap’s control.

Looking ahead, given the launch of several new products and potential expansions into new markets, I believe the company is well-placed for strong growth over the next decade. This could make it a great buy and hold investment option for investors.

More reading

• Altium (ASX:ALU) updates market on restructure
• ASX 200 jumps 2.6%, big 4 banks surge
• 2 outstanding ASX tech shares to buy for the long term
• Is this 1000% runner the next Nearmap (ASX:NEA) share price?
• 3 ASX shares I’d buy if the share market crashes again

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’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. 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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