One of the best investments you could have made over the last decade on the Australian share market was the shares of design software company Altium Limited (ASX: ALU).
During this time the Altium share price has catapulted materially higher and generated a mouth-watering return for shareholders.
Over the period the company’s shares have provided investors with an average total return of 53.27% per annum. As a comparison, the S&P/ASX 200 index has generated an average total return of ~10% over the last decade.
To put this into context, if you had invested $25,000 into Altium’s shares ten years ago, your investment would have grown to be worth a staggering $1.8 million today.
Why has Altium been such a successful long-term investment?
Firstly, it is worth remembering that although Altium appears to have come out of nowhere in the last couple of years, it has been around significantly longer than you might expect.
Altium was actually founded in 1985 in Tasmania but was known as Protel Systems until 2001. It listed on the ASX in 1999, as Protel Systems, raising $30 million at $2.00 per share.
I think it’s fair to say that things didn’t really go too well for the company initially. In fact, by 2003 its shares were trading 80% lower than its IPO price at a lowly 20 cents.
But then along came the Internet of Things boom and everything changed.
The Internet of Things is the term used to describe the extension of internet connectivity into physical devices and everyday objects.
In order for the majority of these devices to communicate and interact with others over the internet, they require printed circuit boards inside them. Which is why Altium’s award-winning design software has been experiencing a significant increase in demand in recent years.
And with Statista estimating that the Internet of Things market will grow from 23 billion devices in 2018 to 75 billion devices in 2025, this demand looks likely to continue to strengthen over the next decade.
Whilst I wouldn’t expect its shares to provide the same level of return over the next decade, I think this the quality of its products and the IoT boom have positioned it perfectly to be a market-beater. As a result, I continue to class its shares as a buy along with fellow tech stars Appen Ltd (ASX: APX) and WiseTech Global Ltd (ASX: WTC).
Overall, I believe this demonstrates that getting in early on potential tech stars can lead to incredible returns if everything goes to plan. Which is why it might be a great time to consider these growing tech companies today.
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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 WiseTech Global. The Motley Fool Australia owns shares of Altium and Appen 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 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. 2019