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My best share investment of the 2010s

Tristan Harrison
Winners Cup Trophy

The 2010s is nearly over and what a decade it has been. It has been a strong decade for technology shares that benefit from network effects and recurring revenue.

There have been a few high-performing shares on the ASX that have been called ‘WAAAX’, being WiseTech Global Ltd (ASX: WTC), Afterpay Touch Group Ltd (ASX: APT), Appen Ltd (ASX: APX), Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO).

Luckily, I invested a few years ago in Altium shares at just under $4.50 and that has been my best performer returning just over 710%. I wish I could have invested $100,000 at that price rather than the small amount that I did at the time, but in percentage terms it has been my best performer by far. Of course, I’ve also been involved in some shockers as well.

I was attracted to the exposure to the ‘Internet of Things’, the technology, the financials and the dividend.

Altium has progressed a lot since the start of 2016, it has increased its earnings before interest, tax, depreciation and amortisation (EBITDA) margin, it has grown its market share, it has diversified its customer base further to include companies like Tesla and Space X.

It’s on the verge of passing its long-term goal of US$200 million revenue goal and it has set a further goal of US$500 million over the next five or so years.

But there are plenty of other reasons why Altium is such an attractive business and why it’s doing so well. Altium has very good, focused management. Altium has a very good balance sheet with no debt, a growing cash balance and it has a rapidly growing free cash flow. As a bonus, it has a fast-growing dividend.

Foolish takeaway

Altium is one of the most promising businesses on the ASX in my opinion with Altium Designer, Octopart and Altium 365.

It’s now trading at 41x FY21’s estimated earnings, so it definitely isn’t cheap. I’d much rather buy under $30 – but who knows when it will go that low again, apart from in a recession? There are probably better priced opportunities out there today. 

The post My best share investment of the 2010s appeared first on Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns shares of Altium. 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