If you’re looking to take advantage of the recent market selloff to make your first investment, then you’re in luck.

A lot of quality shares have fallen heavily recently and are now trading at a significant discount to what investors were happy to pay just a few weeks ago.

If you just have $1,000 to invest, then I would suggest you think long-term and consider the two ASX shares list below. Here’s why I like them:

Afterpay Ltd (ASX: APT)

The first option to consider investing $1,000 into its Afterpay. I believe this payments company would be a fantastic long term option due to the growing popularity of the buy now pay later (BNPL) payment method with both consumers and retailers. This is particularly the case with younger consumers that are turning away from credit cards in their droves in favour of BNPL options. 

At the end of FY 2020 the company had a total of 9.9 million active customers, up 116% year on year. This comprises 3.3 million ANZ customers 1 million UK customers, and 5.6 million US customers. The latter now contributes 56.5% of its total customers, but is still only scratching at the surface of its huge market opportunity in the $5 trillion market. In addition to this, the company is launching in Europe soon and has its eyes on the Asian market. All in all, if everything goes to plan, I feel Afterpay could become a giant of the payments industry. This could make it worth taking advantage of the 23% pullback in the Afterpay share price from its high.

CSL Limited (ASX: CSL)

If you’re going to make your first investment, why not make it the highest quality company that Australia (arguably) has to offer. I think this biotherapeutics company would be a great option for investors due to the strong long-term growth potential of both its CSL Behring and Seqirus businesses.

CSL Behring is the global leader in plasma therapies and Seqirus is the second biggest influenza vaccines company globally. Both businesses have been growing strongly in recent years and look well-placed to continue this trend for some time to come. This is thanks to increasing demand for immunoglobulins, the quality of its products, and their burgeoning development pipelines. So with the CSL share price down 18% from its high, now could be an opportune time to invest.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 drops over 2%, tech and oil fall
• Why the Laybuy (ASX:LBY) share price is tanking today
• Top brokers name 3 ASX shares to buy today
• ‘We could be heading for a lot of pain’

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 CSL Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Blackmores Limited (ASX: BKL) share price has been on a bumpy ride in 2020 but could it be a cheap buy near its 52-week low?

What does Blackmores do?

Blackmores is an Aussie vitamins and nutritional supplements business with a market capitalisation of more than $1 billion. The group’s product range spans a wide variety of markets including arthritis, digestive health, cold and flu, infant nutrition and women’s health.

Blackmores has extensive operations across Australia, New Zealand and Asia with a strong sales channel to China.

How has the Blackmores share price performed?

2020 has been something of a rollercoaster for shareholders. The company’s share price climbed to a new 52-week high of $95.68 in February before crashing lower in the March bear market.

Coronavirus concerns weighed on the company’s value as investors worried about supply chain issues and reduced sales.

Those fears were somewhat realised in August when Blackmores released its full-year earnings result.

The company posted a 3% decline in revenue from FY19 to $568 million. Softer earnings flowed through to the bottom line with net profit after tax slumping 66% to $18.1 million.

That net profit figure was at the lower end of the company’s guidance range as China sales fell 16% to $103 million. Australia and New Zealand sales were also down 15% to $227 million as COVID-19 hit inventories and regulatory challenges weighed on the company.

Is the Blackmores share price a buy?

I think Blackmores is an interesting share to buy right now. The Blackmores share price is trading at $61.64 per share, down 64.4% from its 52-week high and just above its 52-week low.

However, the group’s price to earnings (P/E) ratio is 71.2 right now which could make it a touch overvalued.

I also think there are a couple of concerns for earnings growth in the next 6 to 12 months. The first is the heavy reliance on China, with increasing trade tensions on a range of Aussie goods.

There’s also the strong Aussie dollar which may hurt a net exporter like Blackmores into offshore markets.

However, a focus on health and wellbeing alongside the retreat of regulatory concerns may be enough to propel the Blackmores share price higher in 2021.

More reading

• Half of ASX 200 stocks at risk as China-Australia relations hit new low
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• These were the worst performing ASX 200 shares last week
• Top brokers name 3 ASX shares to sell today
• ASX 200 rises, Bingo jumps after reporting

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores 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 I’m watching the Blackmores (ASX: BKL) share price this year appeared first on Motley Fool Australia.

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If you’re a fan of ASX growth shares like I am, then you’re in luck.

Right now there are a large number of high quality options on the local share market.

Three top ASX growth shares I would buy in September are listed below. Here’s why I like them:

a2 Milk Company Ltd (ASX: A2M)

I think this infant formula and fresh milk company could be worth considering with a long term view. Especially after recent share price weakness means it is now trading almost 20% below its 52-week high. This pullback has been driven largely by concerns that its near term performance could be impacted by the pulling forward of sales into FY 2020 during the pandemic. However, it is worth noting that management recently reiterated that it still expects strong revenue growth in FY 2021. This could make the recent a2 Milk share price weakness a buying opportunity.

Nearmap Ltd (ASX: NEA)

I think this aerial imagery technology and location data company could be a growth share to buy. Especially given the quality of its offering, and particularly its new AI product, which I feel put Nearmap in a position to grow its market share materially in a highly fragmented market. The company also has the opportunity to increase its addressable market by expanding into other countries in the future. Though, for now, the enormous U.S. market gives it with a significant runway for growth over the 2020s.

Xero Limited (ASX: XRO)

A final ASX growth share to consider buying is Xero. It is one of the world’s leading business and accounting software providers. Due to the quality and stickiness of its software, its strong pricing power, and massive global market opportunity, I believe it is well-placed to deliver above-average growth over the long term. This could make the Xero share price a market beater over the 2020s.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 drops over 2%, tech and oil fall
• Top ASX shares to buy this week
• Is the Xero (ASX:XRO) share price a cheap buy?
• A2 Milk (ASX:A2M) share price on watch after trading update

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 Nearmap Ltd. and Xero. The Motley Fool Australia owns shares of A2 Milk. 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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The PointsBet Holdings Ltd (ASX: PBH) share price tumbled 20% on Wednesday after the successful completion of its $303m capital raising. The capital raising will be used to fuel its exclusive NBCUniversal partnership which will provide the company with significant exposure to the US sports betting scene. Could yesterday’s weakness in the PointsBet share price be an opportunity to buy?

NBCUniversal Media Partnership 

PointsBet entered into a 5-year exclusive media partnership with NBCUniversal. This partnership will push the PointsBet brand and product in front of the largest sports audience of any US media with exclusive television and digital sports betting integrations. PointsBet has committed a total market spend of US$393m in progressively increasing amounts over the 5-year media partnership together with incentives payable to NBC for customer referrals. Subject to shareholder approval, NBC will be issued shares representing 4.9% on issue. 

From one perspective, the deal is very expensive and may not translate into profitability for PointsBet at the end of the five-year deal. However, the US sports betting market is an eyewatering revenue opportunity. Morgan Stanley and JP Morgan have both estimated that the potential combined online and retail sports betting market to be worth US$12bn by 2025. As it stands, this could be a land grab opportunity for market share, brand recognition and active customers. 

FY20 Performance 

PointsBet delivered a fair FY20 performance considering the broad COVID-19 related challenges. Its betting turnover increased 103% to $1,152bn, net wins increased 191% to $82m and active customers increased 39% to 111,400. Its Australian performance is solid with positive EBITDA for FY20 after only 3 years of operation. Overseas, the company continues to expand across the US with the launch of retail and online operations in Iowa, online operations in Indiana and licenses approved for Illinois and Colorado. It also received market access to seven additional states subject to license approval. 

Is it a buy? 

The capital raising was issued at a 48.9% discount based on its A$13.69 closing price on Wednesday, 2 September. While $303m also represents a significant percentage of its existing market capitalisation. The potential dilution and potential profit taking, combined with the current volatile US market, tech sell-off and US election is likely to increase volatility in the near term. I believe investors should wait on the side lines and wait for a better timing opportunity to enter the PointsBet share price. 

More reading

• Why Accent, Afterpay, Nine, & PointsBet shares are dropping lower today
• Why the PointsBet (ASX:PBH) share price tumbled 21% lower today
• Top ASX growth shares to buy in September 2020
• Why PointsBet launched a $353 million capital raising
• 4 of the best ASX shares to buy before 2021

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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.

The post Should you buy the PointsBet (ASX:PBH) share price after its capital raising?  appeared first on Motley Fool Australia.

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Although this month’s market selloff has been very disappointing, one positive is that it has pulled down a number of dividend shares to levels that offer attractive yields.

Two ASX dividend shares that I would buy after the selloff are listed below. Here’s why I like them:

Bravura Solutions Ltd (ASX: BVS)

The first ASX dividend share to consider buying is Bravura Solutions. The shares of the provider of software products and services to the wealth management and funds administration industries have fallen over 43% from their 52-week high. As well as weakness in the tech sector, investors have been selling Bravura’s shares after the company warned that earnings could be flat in FY 2021 because of the pandemic.

While this is a touch disappointing, I’m confident its growth will accelerate again once the crisis passes. Especially considering the quality of its offering and its massive market opportunity. In light of this, I think it is worth taking advantage of this pullback by buying its shares today. Based on the current Bravura share price, it offers a 3.25% yield.

People Infrastructure Ltd (ASX: PPE)

People Infrastructure is a leading workforce management company that provides innovative solutions to workforce challenges. It was a very strong performer in FY 2020 despite the pandemic. People Infrastructure delivered a 34.5% increase in revenue to $374.2 million and a 53.3% increase in normalised net profit after tax and before amortisation (NPATA) to $18.4 million.

This strong form allowed the company to declare a fully franked final dividend of 4.5 cents per share. Which brought its full year dividend to 8.5 cents per share for FY 2020. Based on the current People Infrastructure share price, this provides investors with an attractive 3.15% dividend yield. And while trading conditions remain tough in FY 2021, I’m confident it is well-placed to grow its earnings and dividend once again.

More reading

• 3 quality ASX shares that could provide monster returns
• 2 ASX dividend shares to buy instead of CBA
• 5 things to watch on the ASX 200 on Friday
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia has recommended People Infrastructure 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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It was a disappointing day of trade for the S&P/ASX 200 Index (ASX: XJO) on Wednesday. The benchmark index followed the lead of U.S. markets and dropped 2.15% to 5,878.6 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 expected to rebound.

It looks set to be a much better day for the ASX 200 on Thursday after Wall Street rebounded overnight. According to the latest SPI futures, the benchmark index is expected to jump 78 points or 1.3% higher at the open. On Wall Street the Dow Jones rose 1.6%, the S&P 500 climbed 2%, and the Nasdaq stormed 2.7% higher.

Oil prices recover.

It could also be a better day for energy producers Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) on Thursday after oil prices recovered some of their recent declines. According to Bloomberg, the WTI crude oil price is up 2.9% to US$37.84 a barrel and the Brent crude oil price has risen 2.1% to US$40.60 a barrel.

Tech shares to rebound

Australian tech shares such as Afterpay Ltd (ASX: APT) and Nearmap Ltd IASX: NEA) could bounce back strongly on Thursday after their U.S. counterparts charged higher overnight. The local tech sector has a tendency to follow the lead of the technology-focused Nasdaq index, which jumped 2.7% on Wednesday night. This could potentially be a sign that the tech rout is over.

Gold price storms higher.

Gold miners Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch on Thursday after the gold price stormed higher. According to CNBC, the spot gold price is up 0.7% to US$1,957.00 an ounce. This follows the softening of the U.S. dollar and concerns over the AstraZeneca coronavirus vaccine candidate.

CSL and others going ex-dividend.

A number of ASX 200 shares are going ex-dividend this morning and could trade lower. This includes biotech giant CSL Limited (ASX: CSL) for its 148.1 cents per share dividend, which will then be paid to shareholders on 9 October. Also going ex-dividend are engineering company Monadelphous Group Limited (ASX: MND), healthcare technology company Pro Medicus Limited (ASX: PME), and mining giant South32 Ltd (ASX: S32).

More reading

• ASX 200 drops over 2%, tech and oil fall
• 2 ASX shares I’d buy if this crash gets worse
• Why the Clean TeQ (ASX:CLQ) share price fell 10% today
• Why Brainchip (ASX:BRN) shares are topping the ASX today
• Why the Laybuy (ASX:LBY) share price is tanking today

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 CSL Ltd. and Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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If you’re looking for shares to buy for the long term, then I think the ones listed below would be worth considering.

I believe these shares are well-placed for growth and could provide monster returns over the long term.

Here’s why I think it is worth looking at adding them to your portfolio:

Bravura Solutions Ltd (ASX: BVS)

Bravura is a provider of software products and services to the wealth management and funds administration industries. While management has warned that its earnings could be flat in FY 2021 because of the pandemic, I expect its growth to accelerate again once the crisis passes. Especially given the quality of its software solutions and particularly its Sonata wealth management product. Overall, I think it could be well worth taking advantage of the recent pullback in the Bravura share price.

NEXTDC Ltd (ASX: NXT)

A second ASX share I think could provide monster long term returns is NEXTDC. With more and more computer infrastructure moving to the cloud, I believe this innovative data centre-as-a-service provider is exceptionally well-positioned for growth over the next decade. I also suspect NEXTDC could expand into the Asian market in the future to increase its addressable market.

Pushpay Holdings Group Ltd (ASX: PPH)

A final ASX share that I would buy for potentially monstrous returns is Pushpay. It is a NZ-based donor management and engagement platform provider for the church market. I’ve been very impressed with the company’s progress in recent years and believe it is perfectly positioned to continue this positive form in the future. Especially thanks to its industry leading platform, its recent margin enhancing acquisition of Church Community Builder, and the highly fragmented market it operates in. Overall, I believe the Pushpay share price has the potential to smash the market over the 2020s.

More reading

• Where to invest $10,000 into ASX shares
• 2 top ASX shares I’d buy with $2,000
• 3 high quality ASX shares for smart investors to buy today
• 3 ASX shares I’d buy to quickly add diversification
• Polynovo and one more ASX growth share to buy in 2021

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 4DS Memory Ltd (ASX: 4DS) share price has defied market sentiment and surged higher today. On the back of investor excitement in the computer chip industry, the 4DS Memory share price finished the day at 7.3 cents, up 46%. This compared to the All Ordinaires Index (ASX: XAO) which slumped 2.1% to 6,058 points.

What does 4DS do?

4DS Memory is a semi-conductor company that develops resistive random-access memory (ReRAM). With research facilities in Silicon Valley, the start-up tech seeks to commercialise its product to become a replacement for more traditional Flash memory storage.

It is estimated that the total addressable market for the memory industry is around $40 billion.

ASX speeding ticket

The ASX issued 4DS Memory a speeding ticket today following its dramatic share price rise. 4DS Memory advised it was not aware of any information that could explain the recent trading of its securities, other than its most recent company updates.

Early last month, 4DS memory was granted 3 additional patents that related to the operation of 4DS Interface Switching ReRAM as a high-speed Storage Class Memory. CEO Dr Guido Arnout said the achievement presented a significant milestone for the company.

Investor excitement

While the market has been dragged down by heavy losses overnight in the Dow Jones Industrial Average (INDEXDJX: .DJI) and NASDAQ, investors have been taking up positions on 4DS Memory. This is thanks to the recent raft of positive announcements from rival, Brainchip Holdings Ltd (ASX: BRN). The Brainchip share price has quadrupled in the past month from 18 cents to 75 cents in today’s market closing.

Clearly, investors are pre-empting 4DS Memory to follow suit thanks to its innovative storage memory that could be used in advanced applications.

About the 4DS Memory share price

The 4DS Memory share price has risen almost 300% since falling to its 52-week low of 2.5 cents in March. Since the start of the calendar year, the 4DS Memory share price is up 30% and could push higher in the coming days.

More reading

• Why Brainchip (ASX:BRN) shares are topping the ASX today
• ‘We could be heading for a lot of pain’
• Brainchip (ASX:BRN) share price jumps 15% after ASX query
• Why BrainChip, Codan, IPH, & Nufarm shares are climbing higher today
• Why BrainChip (ASX:BRN) and Recce (ASX:RCE) shares just hit record highs

Motley Fool contributor Aaron Teboneras 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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The S&P/ASX 200 Index (ASX: XJO) fell by 2.15% today to 5,879 points.

It has been a tough September so far for share market investors. The NASDAQ has dropped by around 10% over the past week. This is hurting the local Australian share market as well.

There was a sea of red today, particularly in the technology and resource sectors.

Biggest ASX 200 declines

Oil saw some of the biggest declines, the Beach Energy Ltd (ASX: BPT) share price dropped 9.2%, the Oil Search Limited (ASX: OSH) share price dropped 7.8% and the Santos Ltd (ASX: STO) share price fell 5.4%.

Looking at technology, the Megaport Ltd (ASX: MP1) share price fell 6.1%, the Afterpay Ltd (ASX: APT) share price recovered to just a 1.3% drop, the Appen Ltd (ASX: APX) share price fell 4.1% and the Nearmap Ltd (ASX: NEA) share price dropped 3.7%.

The other big falls in the ASX 200 was the Graincorp Ltd (ASX: GNC) share price falling 8.9% and the Credit Corp Group Limited (ASX: CCP) share price dropped 7.75%.

Australia’s big four ASX banks also suffered a decline. The Commonwealth Bank of Australia (ASX: CBA) share price dropped 2.5%, the Australia and New Zealand Banking Group (ASX: ANZ) share price fell 3%, the National Australia Bank Ltd (ASX: NAB) share price declined 2.6% and the Westpac Banking Corp (ASX: WBC) share price went down 3.3%.

There were a few businesses that managed to rise. The Nufarm Limited (ASX: NUF) share price went up 2.7%, the GUD Holdings Limited (ASX: GUD) share price grew 2.4% and the IPH Ltd (ASX: IPH) share price rose 2.1%.

Qube Holdings Ltd (ASX: QUB)

The company announced today that Patrick Terminals has entered into lease arrangements extending Patrick’s tenure at the Port of Melbourne to 2066. Qube holds a 50% interest in Patrick Terminals.

The company said that the arrangements secure Patrick’s long-term strategic footprint at East Swanson Dock and an adjoining logistics site at Coode Road. Patrick has recently upgraded its capabilities at the East Swanson Dock.

Qube also said that it has secured funding for a new rail terminal. The Coode Road logistics site will be developed over the next few years to deliver rail capacity and to interface with Patrick’s container terminal.

Patrick has entered into a development deed with the Port of Melbourne to co-fund and build the rail terminal. Patrick’s share of the cost is expected to be funded from its operating cashflow and available, undrawn debt facilities.

The Qube share price fell 2.6%.

Codan Limited (ASX: CDA)

Codan announced today that it had won a significant contract.

It said that Codan Communications has won a contract with a large African government to supply tactical communications equipment. The contract has a value order of more than US$10 million to supply Sentry-H radios and accessories. Codan expects to deliver the order in the second half of FY21.

The radios are intended for national security purposes in military operations in a country-wide program. The contract is a one-off purchase and there are no material conditions that are required to be satisfied prior to delivery.

Management said that this is a significant contract for Codan, as it reinforces its strength in providing such equipment to the African market and enhances its strategy to successfully penetrate the security and military sector globally.

More reading

• Why the Clean TeQ (ASX:CLQ) share price fell 10% today
• Why Brainchip (ASX:BRN) shares are topping the ASX today
• Graincorp (ASX:GNC) share price tumbles 9%. Here’s why it looks like a bargain
• Why the Laybuy (ASX:LBY) share price is tanking today
• ASX banks facing new battle with zombie army

Tristan Harrison 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 MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended MEGAPORT FPO and 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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Is this the start of the next crash for ASX shares and indeed the global share market?

We’ll see, but what’s clear is that share prices have dropped lower. Whether you look at BetaShares NASDAQ 100 ETF (ASX: NDQ), iShares S&P 500 ETF (ASX: IVV) or ASX tech shares like Afterpay Ltd (ASX: APT) – everything is down.

There are some great businesses on the ASX. There were loads of opportunities six months ago. Now some ASX shares are looking good value again. Something like A2 Milk Company Ltd (ASX: A2M) looks very interesting to me.

I’m interested in buying the best quality ideas, but some haven’t dropped far enough yet. However, if they dropped another 10% (or more) then I’d be very interested in these two ideas:

Altium Limited (ASX: ALU)

Altium is an electronic PCB software business. I have often written about Altium as a top ASX growth share idea. It has a lot of growth potential with the way the world is steadily getting more technological.

It can point to a very impressive client base. Customers include Tesla, Space X, Boeing, Bosch, Google, Amazon, Microsoft, Apple, Disney, Broadcom, Qualcomm, Siemens, Honeywell, CSIRO and so on.

FY20 has seen a significant slowdown due to COVID-19 impacts. Revenue only grew by 10% to US$189.1 million. The company still has a long-term goal of US$500 million of revenue, though that target is expected to take six to twelve months longer than before.

But many of the things that attracted me to Altium about its long-term potential are still there. The ASX share is still debt free, it still doesn’t capitalise its research and development costs, it still has a high earnings before interest, tax, depreciation and amortisation (EBITDA) margin (of around 40%) and so on.

Whilst COVID-19 is difficult, Altium is doing its best to offer clients the products to help them to continue to operate. Altium 365 is a cloud offering and it now has over 5,000 active users with more than 2,600 active accounts.

Due to these economic difficulties, I’m not as inclined to pay as high of a price for Altium shares as before. At the current Altium share price it’s priced at 52x FY22’s estimated earnings. However, I don’t think I would want to buy the ASX share at a share price above $30 for now.  

Pro Medicus Ltd (ASX: PME)

Pro Medicus is a healthcare IT business which specialises in enterprise imaging and radiology information system software.

The company had a really strong result in FY20. Underlying revenue grew by 23.9% to $56.8 million, underlying profit before tax grew 33.4% to $30.3 million, profit after tax went up 20.7% to $23.1 million.

Pro Medicus has a lot of attractive features. The ASX shares’s earnings before interest and tax (EBIT) margin increased to 52.5%, its cash balance rose 34.3% to $43.4 million and it remains debt free. The full year dividend was increased by 14.3% to $0.12 per share.

COVID-19 impacts were limited and over FY20 it won a few big contracts. Management disclosed that its sales pipeline continues to be very promising.

Pro Medicus is a very strong business and it has a very effective offering for doctors. However, I’m not buying it today because it’s still priced highly.

At the current Pro Medicus share price it’s trading at 66x FY22’s estimated earnings. That’s a high valuation despite the recent falls.

Foolish takeaway

I really like both of these ASX shares. They have great products and balance sheets. However, as investors the price we pay matters. I’d only want to think about buying if both of them fell by another 10%. There are other opportunities out there I’d buy first.

More reading

• 3 ASX tech shares to buy for the long term after the Nasdaq selloff
• 3 high quality ASX shares for smart investors to buy today
• 3 ASX shares for growth, income, and value investors to buy right now
• Broker picks best ASX small cap stocks to buy from the reporting season
• 4 of the best ASX shares to buy before 2021

Tristan Harrison owns shares of Altium. 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 BETANASDAQ ETF UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of A2 Milk and AFTERPAY T FPO. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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