There aren’t many shares that can fit into every investor’s portfolio.
Some don’t offer much growth, some don’t pay a dividend, some don’t have good management, some are too cyclical and so on.
I think the two below shares could fit into every portfolio:
Altium Limited (ASX: ALU)
Altium is one of the best of the WAAAX tech group in my opinion. It has a number of high-quality products that could become much larger businesses in the coming years. Altium Designer and Octopart have exciting futures thanks to the Internet of Things. Altium 365, a cloud offering, could really bring things together for engineers.
The electronic PCB software business generates more than half of its revenue from subscriptions, providing attractive recurring revenue at high profit margins.
It generates its revenue from across the world with growth being created in all regions. China in-particular is creating a lot of growth for Altium right now.
Altium is debt free and expenses all of its research & development costs whilst aiming to grow the dividend every year.
There’s a lot to like about Altium and it’s trading at 37x FY21’s estimated earnings.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is an investment conglomerate that has been going for over 100 years. It has a really good long-term track record.
Over the past 15 years it has outperformed the All Ordinaries Accumulation Index by an average of 2.6% per annum. Over the past five years it has outperformed by an average of 3.1% per annum.
Soul Patts has managed to do this with management investing for the long-term in a diverse array of assets like Brickworks Limited (ASX: BKW) and TPG Telecom Ltd (ASX: TPM) and holding them whilst they become large businesses.
Technology companies are all the rage, but solid returns can be achieved in other sectors and I think Soul Patts does well at identifying those opportunities. Some of the new focuses are premium retirement living (but not regulated aged care), financial services and resources like gold and copper.
Soul Patts continues to diversify its portfolio, it’s trading at 26x FY20’s estimated earnings and has a grossed-up dividend yield of 3.6%.
The share prices of both businesses are quite a bit lower than earlier in the year but I think they both have very good growth prospects. Altium might have the best chance to create the bigger returns over the next five years, but I expect Soul Patts will be around in another 100 years from now.
However, there are more than two ASX shares that should be in your portfolio. These top companies all have a great chance to beat the market.
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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. 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.