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2 shares every investor should own

The ASX is only home to about 2% of the world’s listed businesses, but it does have a few quality shares within its ranks.

I’m not talking about the big caps like Commonwealth Bank of Australia (ASX: CBA) or Telstra Corporation Ltd (ASX: TLS). I do not believe those large businesses are going to start delivering double digit earnings per share (EPS) growth any time soon.

I believe there are several shares with market capitalisations of above $1 billion that every investor on the ASX should have on the ASX.

These are two of them:

Altium Limited (ASX: ALU)

Long-time readers would know that I’m a big fan of Altium, but I usually only write about a stock regularly when I think it’s good value – which is why my coverage of Altium as a buy idea has come right down.

The electronic PCB software company has delivered strong profit growth and even stronger share price appreciation. Management are confident that the company can achieve global market-leading status by the mid 2020s due to the rise of the ‘Internet of Things’. Who knows what that means for the growth future profits?

Today’s share price could look good value in five years, but it’s expensive today trading at 43x FY19’s estimated earnings. That includes the 8% share price drop today. It’s worth owning if you can get it at a good price.

REA Group Limited (ASX: REA)

REA Group is the owner of Australia’s leading property website, realestate.com.au. Aussies are property mad and this has helped propel REA Group’s share price up to nearly $90.

The property leader is cleverly adding more features to its property advertisements every year, which encourages vendors to shell out more. REA Group is a great way to get exposure to the property sector without owning an investment property.

In the long-term REA Group could profit from the investments it has made into overseas property websites, which could be future profit powerhouses for the company in countries like the USA, India and several Asian countries.

It’s currently trading at 35x FY19’s estimated earnings.

Foolish takeaway

I believe both shares should be in every investor’s portfolio, assuming you can buy them at the right price.

I wouldn’t call either share a value buy at today’s values. Looking ahead I’d say Altium could be more likely to provide the better returns over the next decade, but REA Group is possibly likely to do better over the next 12 months because of its lower expectations and price/earnings ratio.

If you’re looking for a quality growth buy, then this exciting growth share is trading at much better value and is expecting profit growth of 30% this year alone.

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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended REA Group 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.

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