Buy, hold, sell: Altium (ASX:ALU), BHP (ASX:BHP) and NASDAQ 100 ETF (ASX:NDQ)

The share prices of businesses are always changing, meaning what you should do with a share can change based on its valuation.

If a share looks good value then obviously it’s a ‘buy’. If it looks overly expensive then it’s a ‘sell’. If you’ve bought it and it’s had a good run it may not be worth buying or selling, it’s simply a ‘hold’.

So, here’s one of each:

Buy – BetaShares NASDAQ 100 ETF (ASX: NDQ)

This exchange-traded fund gives investors exposure to some of the best technology businesses on the planet like Apple, Amazon, Alphabet (Google), Facebook and Microsoft.

The world is only going to get more technological and everyone in the western world relies on one or more of these businesses in their everyday life for social or work reasons.

There are few ETFs on the ASX that have as much growth potential as this one over the next decade and I think every investor should have a decent amount of exposure to them.

Hold – Altium Limited (ASX: ALU)

This is arguably the world’s best electronic PCB software business helping engineers create the products of the future. Apple, Space X, Tesla, Google and NASA are just a few of its clients.

Altium management are trying to create a world where there is one clear choice in the field – similar to the dominance of Microsoft Office with Word and Excel. If successful this would be a great opportunity for the business.

The company grows revenue and profit impressively year after year and has achieved objectives that were set a few years ago.

The only reasons it’s a ‘hold’ for me and not a ‘buy’ is that its current valuation is very optimistic. There may come a time over the next year or two when Altium and other ASX tech peers drop back in valuation – that would be a great time to buy shares.

It’s currently trading at 46x FY19’s estimated earnings.

Sell – BHP Billiton Limited (ASX: BHP)

One of the key points for an attractive investment idea is that it can set its own prices, preferably with little detriment to demand if it raises prices at an inflation-beating rate.

Resource businesses essentially don’t have that power, they have to take whatever price they can get. They require huge amounts of capital to start and maintain a mine. Plus, a disaster can cost hundreds of millions of dollars – like BHP with Samarco and BP in the Gulf of Mexico.

The recent rise in prices of iron and oil could make now a good time to sell BHP shares. It’s best to buy cyclical shares at the bottom and sell at the top.

Foolish takeaway

The closer Altium drifts to $20 the more interested I will be in buying shares, as I think it has a very promising future over the next decade.

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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. 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.

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