There are at least 3 shares I’d buy if the coronavirus selloff gets worse again.
The best time to buy shares is when they’re trading at a much cheaper price than before. During March 2020 we saw plenty of share prices trading a lot cheaper compared to early February 2020. A lot of those shares have now recovered strongly so I’m not jumping to buy them today.
Here are three shares I’d buy if the coronavirus selloff gets worse again:
Altium Limited (ASX: ALU)
Altium is one of my favourite long-term tech ideas. It has generated excellent growth over the past five years and I think there’s a lot more to come in the 2020s. Altium is aiming for market leadership by 2025 with 100,000 Altium Designer subscribers and US$500 million revenue.
Every new vehicle, device or other item needs electronic PCB software to help design it. Altium is an essential part of creating the future’s technology. I like that it has no debt, growing profit margins and a good cash balance.
At a share price above $35 I don’t think Altium is the most obvious buy right now. I’d rather buy it under $30 considering Altium is warning of tougher conditions due to the coronavirus.
Pro Medicus Limited (ASX: PME)
Pro Medicus is another top-quality growth share with no debt and a growing cash balance. It’s a leading global provider of radiology IT systems.
One of the most attractive thing about Pro Medicus – apart from its long-term growth prospects – is its high profit margins. In the FY20 half-year result it reported a 50.2% earnings before interest and tax (EBIT) margin. That’s a very strong operating margin for an ASX share.
However, the share price has grown from under $16 to above $28. I’d be very interested in looking at Pro Medicus under $20 considering how low interest rates are. Growth shares are worth more because of lower interest rates.
A2 Milk Company Ltd (ASX: A2M)
A2 Milk has been one of the best performing shares on the ASX over the past five years. It has no debt and it has been building its impressive cash balance for years.
The coronavirus situation is boosting demand for A2 Milk’s products. The company is also being careful with its spending, which has led the company to expect the earnings before interest, tax, depreciation and amortisation (EBITDA) margin to be higher than previously expected.
I like that the company is still aiming for a 30% EBITDA margin because that balances growth and short-term profit. The great thing about A2 Milk is that there are still so many more regions to grow into. It’s just only just getting started in the east of the US and Canada is the next target.
At around $18 it’s definitely not cheap. I’d start to be interested again if it were to drop under $17 under the current conditions. A Chinese issue could easily be much more damaging.
I think each of these shares are among the best on the ASX. Altium is my favourite of the three, but they could all be strong performers. But I’d prefer all of them to be more than 10% cheaper before thinking about buying. At today’s price I’d probably pick A2 because it’s still growing strongly whereas Altium has warned of impacts.
For now I think I’d rather buy some other top ASX shares for my portfolio.
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Tristan Harrison owns shares of Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of A2 Milk and Altium. 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.