Altium Limited (ASX: ALU) shares have rocketed higher in the last few years, but is it now the right time to buy?
Background on Altium
Altium is an American, Australian-domiciled software group that designs software for circuit board printing. The group has global operations spanning the United States (US), Australia, China, Europe and Japan.
In the last 5 years, Altium’s operations and earnings have exploded and the company’s share price is up 1,184.36% since February 2015.
The Aussie tech group is set to report its half-year results next week and we could see Altium shares move significantly.
Is it the right time to buy?
While early investors in Altium would have seen some significant capital gains, it’s not always good news with these tech stocks.
There’s also been growing chatter that many ASX shares could be overvalued right now. That’s natural given the S&P/ASX 200 Index (INDEXASX: XJO) has been surging from record high to record high.
However, Altium shares are trading at a price-to-earnings (P/E) multiple of 69.3 times. That means for every dollar you receive from the share, you’re paying $69.30.
Growth shares are a little different and P/E multiples aren’t always the best metric. Much of Altium’s value is tied up in the expectation of future returns rather than immediate earnings.
However, if we see a slip-up in Monday’s results, expect investors to sell out of Altium shares quickly.
It’s hard to tell what is overvalued with these ASX tech shares as they continue to outperform.
I personally like Afterpay but I think Altium shares could be climbing higher if Monday’s results are strong.
Here are 3 more ASX dividend shares that I'll be watching in February.
When Edward Vesely -- The Motley Fool Australia's resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 126%) and Collins Food (up 79%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.
In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.
Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.
Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia owns shares of Altium, Appen Ltd, and Xero. 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.