The share market is trading close to record highs. It's getting harder to find shares at good value.
Perhaps the right strategy is to go for the top businesses when they dip in price.
The All Ordinaries (ASX: XAO) is still healthily above 7,000. With that in mind, these two ASX shares could be great value:
Altium Limited (ASX: ALU)
I think Altium is one of the best businesses on the ASX. It has a long growth runway thanks to the increasingly technological nature of the world. It has many of the world's best businesses and organisations as clients like Tesla, Space X, NASA, Amazon and Disney. It generates excellent free cashflow. It has a very strong balance sheet. It has growing profit margins. It has a growing dividend. It has global earnings. It has great management. Lots to like.
However, since reporting last week the Altium share price is down almost 20% and it could drift lower over the next few days or weeks. That was despite profit before tax going up 23% and the earnings before interest, tax, depreciation and amortisation (EBITDA) margin rising by another 90 basis points (0.9%) to 39.7%.
The coronavirus in China is the main reason for the sudden pessimism, which is a one-off and (hopefully) short-term problem.
Altium is one share that nearly every ASX investor should want in their portfolio. The next month could be a great opportunity to buy some Altium shares at a lower price.
Pro Medicus Limited (ASX: PME)
Pro Medicus is another of the best businesses on the ASX.
It's debt free with a growing cash balance. Its dividend is growing. It has great management. It has high-quality clients. It's trying to expand into new countries. It's developing new products. It has a very high earnings before interest and tax (EBIT) margin of 50.2%.
Pro Medicus grew net profit by 32.7% and it increased underlying profit before tax by 45.3%. Despite these impressive growth numbers (which come on top of previous growth), the share price is down 40% since early September and it's down 16% since 12 February 2020.
Foolish takeaway
Both businesses are certainly not cheap, they have some of the highest price/earnings ratios on the ASX. However, the most promising businesses like Altium and Pro Medicus with high profit margins aren't going to go to a p/e of 20 any time soon without the rest of the market also being crunched.
This could be the time to buy shares of Pro Medicus whilst it's getting close to a 6-month low, and Altium is at a more manageable valuation today for its potential growth this decade.
