Australia Markets closed

Why the Altium share price climbed 11.4% higher in November

Kenneth Hall
Altium share price

The Altium Limited (ASX: ALU) share price climbed 11.40% in November in a strong rebound for the Aussie WAAAX stock.

What happened to the Altium share price in November?

Altium rebounded in November after sliding lower throughout September and October.

Altium was hammered as the US–China trade rhetoric ramped up and the tech company had a weak start to FY20. However, even after its share price declines, the Altium share price was still up more than 50% to start November. 

Altium is a subscription-based cloud software company used by engineering groups and is part of the prestigious “WAAAX” group of leading ASX tech stocks.

The group has enjoyed strong earnings throughout 2019, which has fuelled its share price higher. 

But November was where the Altium share price arrested the slump and kicked 11.40% higher. Despite this, there was no market sensitive news releases from the software group last month, which could move the share price. In fact, there hasn’t been a peep since its FY19 results release back in August.

The S&P/ASX 200 Index (INDEXASX: XJO) charged towards an all-time high in November and I think this momentum was a real factor behind the Altium share price surge.

Also helping the group’s cause was its declines in prior months, which may indicate it was oversold and this was simply a correction.

Altium trades at an eye-watering 62 times price-to-earnings (P/E) multiple, but that’s not uncommon amongst the WAAAX stocks.

Afterpay Touch Group Ltd (ASX: APT) doesn’t have a P/E multiple yet given its negative earnings, while Appen Ltd (ASX: APX) trades at 58.4x earnings.

WiseTech Global Ltd (ASX: WTC) investors are paying $156.21 per dollar of earnings following its recent share price declines.

Should you buy Altium stock in December?

While a little on the expensive side, the real question is whether Altium can reach its potential or not. If it can, then the current $37.07 per share could turn out to be a bargain.

But in the absence of a crystal ball, I think I’d be turning to cash flow positive companies with a solid earnings base.

The post Why the Altium share price climbed 11.4% higher in November appeared first on Motley Fool Australia.

For a few of these types of stocks, check out these 3 high yield companies below!

Top 3 Dividend Shares To Buy For 2020

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

More reading

Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of Altium, 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.

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