Investing in the ASX is one of the best methods of building wealth over the long term. As companies increase their earnings and profits, their share prices tend to increase, rewarding you (the investor) with capital gains. They are also able to pay out increased profits as higher dividends, adding to the benefits of holding shares.
Here are 2 ASX shares I think are worth holding for the long term.
Altium Limited (ASX: ALU)
Altium provides software for engineers designing printed circuit boards. Printed circuit boards are used in almost all electronic appliances. Forces such as the internet of things, big data, artificial intelligence and the rise of smart, connected devices will drive the proliferation of electronics at previously unseen rates.
Revenue grew 23% to US$171.8 million in FY19, which marked Altium’s 8th consecutive year of double-digit revenue growth. Profit before tax increased 45% to US$57.6 million and earnings per share (EPS) increased increased 41% to US 40.57 cents. Dividends of AU 34 cents were paid during the year, up 26% from AU 27 cents the previous year.
Altium has committed to becoming the dominant provider of printed circuit board software by 2025. It aims to have 100,000 subscribers and $500 million in revenue by 2025. The current strategic revenue target is $200 million for the 2020 fiscal strategic year. Altium expects to exceed this and do so through organic growth. The company has forecast revenue in the range of US$205 million to US$225 million for FY20.
CSL Limited (ASX: CSL)
CSL is now the second largest company by market capitalisation on the ASX and its growth shows few signs of slowing. According to The Australian, Morgan Stanley expects a 3-year EPS compound annual growth rate of around 13% for CSL. In comparison, 3-year EPS compound growth rates are expected to be 11% for the Australian healthcare sector and 3% for the S&P/ASX 200 (INDEXASX: XJO).
CSL grew revenue by 11% to US$8,539 million in FY19 and net profit after tax (NPAT) by 17% to US$1,919 million. The company has forecast revenue growth of 6% and NPAT growth of 7–10% in constant currency in FY20. Strong immunoglobulin growth and lower flu returns are predicted to contribute to 2020 net profit at the top end of guidance.
Goldman Sachs has a buy rating on CSL with a price target of $312. With a variety of projects in active development and EPS predicted to grow at 4 times the rate of the ASX, CSL remains a standout.
The post 2 ASX shares to hold for the long term appeared first on Motley Fool Australia.
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Kate O'Brien 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 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 Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020