Why Altium still looks like a buy

There’s a lot to like about Altium Limited (ASX: ALU). The company has been steadily growing revenue since FY 2012, dividend payments are up again and the Altium share price is ten times higher than it was five years ago, having more than doubled in the past year alone. And for those who have missed those solid returns, it seems it’s not too late to buy Altium shares.

As noted in an article published on this website yesterday, Altium announced revenue of US$140.2 million for FY 2018, up 26% on previous year. The company stated that its Board and Systems Division, which accounts for all of Altium’s printed circuit board (PCB) products excluding NEXUS, contributed US$108.8 million to that figure. As such, it may come as no surprise that Altium intends to focus on its strengths, namely its Board and Systems Division.

Altium has outlined plans of “dominating the PCB market” which the company is confident it will achieve “well before 2025” by securing 100,000 Altium Designer subscribers before that date. The tech company stated that is has a current subscription pool approaching 40,000. Altium also stated that it is well placed to hit its “2020 targets of US$200 million revenue and EBITDA margin of 35% or better”. And it seems likely that assertion will be taken very seriously by Altium’s competition.

Altium’s recent revenue growth has coincided with a slight decline in that of its major competitor Mentor, part of Siemens AG (ETR: SIE). Altium has stated that in FY 2018 it managed to secure about 22% of the market share of revenue in the PCB design software space, up from the 18% in the prior corresponding period. Further, Altium stated that is has been gradually increasing its share of the PCB cake over the past five years while Mentor’s slice has been slightly declining. Mentor remains the dominant player in the PCB space, securing more than 30% of the market share for FY 2018, but Altium believes things will change soon.

Altium has projected that it will eclipse Mentor in terms of market share by 2020 when Altium expects to achieve a figure greater than 30%. I wouldn’t be surprised if Altium hits those targets. The company is still among the best options for ASX investors and, in my mind, is a far stronger investment than other tech companies which have achieved similar year-on-year returns for investors, such as Redbubble Ltd (ASX: RBL).

If you’re looking for more opportunities, you can check this out…

Japanese Billionaire’s Prediction Will Give You Goosebumps

When a veritable investing and entrepreneurial genius speaks, it pays to listen.

In fact, he's now preparing a $100B "war chest" to invest entirely in this "terrifying" new technology, which could spell huge profits for investors.

Click here to learn about this technology and how you can profit!

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.