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3 ASX shares every investor should own

There aren’t many ASX shares that are worth owning in every portfolio, but I think I’ve found three worthy ideas.

They have to have long-term growth potential, be delivering on their current plans resulting in profit growth and pay a dividend.

Here are three of those ASX share ideas:

Altium Limited (ASX: ALU)

Altium is one of the world’s leading electronic PCB software businesses. Most ASX investors have far too little exposure to technology businesses in their portfolios. Technology isn’t a fad, it’s changing all areas of our lives and changing various industries. And it’s definitely worth investing in.

I think Altium is one of the best ways to profit from this technological change, its clients are from every type of device and mechanical background including John Deere, BMW, NASA, Tesla, Apple, Google and Space X.

It would be a mistake to think that the profit growth of Altiun is going to slow down in the near term because Altium management is aiming for the company to become the clear market leader in less than a decade. FY18’s profit could look small compared to FY25’s profit.

Altium is increasing its dividend every six months, making it an income-growing powerhouse.

However, whilst it’s a great business it isn’t worth buying at any price. Without a crystal ball it’s hard to say if it will ever drop below $20, but I’d consider buying some at around that price.

REA Group Limited (ASX: REA)

REA Group is the owner of Australia’s leading property portal site, realestate.com.au.

I have been writing for a long time that an investment property is probably a bad idea. The negative operating cashflow (negative gearing) is evidence enough that the price of that property is too high to create such a low yield.

However, I can understand the allure of getting exposure to the huge property asset class, so REA Group could be the best bet for that. Vendors have to pay a relatively small fee to advertise to reach a large audience. Arguably, more and more of the property advertising budget will be devoted to the online ad in the future.

Indeed, in the current difficult environment, vendors are shelling out for the higher-priced ads to make their property stand out.

I also like REA Group’s international property site investments – Asia is a huge long-term opportunity.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is one of the oldest and best companies on the ASX. It is an investment conglomerate that takes large stakes in businesses it thinks will deliver long-term growth.

It has done very well with some of its key holdings like TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW).

It keeps outperforming the ASX index over longer-term time periods and I believe it will continue to do well with management’s superior capital allocation skills.

A bonus is that it has increased its dividend every year since 2000.

Foolish takeaway

Today’s volatility will probably drop the price of Altium and REA Group quite heavily. Unless Altium drops by more than 10% today, I would choose REA Group based on its pricing power and international investments’ potential growth.

5 Companies we like better than REA Group

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See the 5 stocks

Motley Fool contributor Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Brickworks, REA Group Limited, and TPG Telecom 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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