The coronavirus share market falls are hitting stocks again. The central bank moves by the RBA and US Fed to cut interest rates hasn't calmed markets enough to stop the declines.
Investors may think that cash or bonds are the answer in times like this, but there's a chance that inflation could rise.
I think the answer is invest in high-quality, almost bullet-proof, ASX shares that have durable qualities but also pay dividends to give us a bit of income during these times.
In my opinion, Altium Limited (ASX: ALU) could be one of those shares that is a good idea to get through this uncertainty for these reasons:
Excellent balance sheet
When economies are booming, plenty of business managers out there just focus on the net profit part of the financials, rather than also making sure the balance sheet is very strong too.
If your balance sheet is strong then you can ride through any shorter-term issues, even if your cashflow disappears.
Altium has a great balance sheet. It has no debt and at 31 December 2019 it had US$80.7 million of cash on the balance sheet.
Great cashflow
In the recent half-year result Altium generated US$23.1 million of net profit and US$18.8 million of free cash flow. Its free cashflow looks attractive compared to net profit year after year.
There aren't many ASX tech growth shares that generate as much free cashflow as Altium, particularly when you compare it to the market capitalisation.
Altium's attractive cashflow is continually adding to its cash balance whilst also funding a growing dividend for shareholders.
No direct supply chain
Altium has warned that the coronavirus may cause a bit of a hit to its Chinese earnings, however it's not like plenty of other ASX businesses. Software doesn't need to be physically shipped. It doesn't require someone or something to fly in a plane for the sale. It doesn't need foot traffic to walk into a shop.
The share price of Altium is one thing, but its actual profit and operations will hopefully see less of an impact compared to other shares on the ASX.
Good long-term future
Regardless of what happens in the short-term, Altium has a very promising long-term future because of the growth of technology in our day to day lives. Entertainment devices, healthcare, vehicles, appliances – they're all getting more technology, which Altium's offering helps with.
The company is aiming for 100,000 Altium Designer subscribers and US$500 million of revenue by 2025.
Foolish takeaway
Altium is trading at 44x FY21's estimated earnings and it has a dividend yield of 1.2%. It's certainly not cheap, but I think it's well placed to do well during this period and it's on track for long-term success.
