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3 ASX shares I’d buy if the share market crashes again

market crash chart

I’ve got my eyes on some ASX shares that I’d buy if the share market crashes again.

COVID-19 is still affecting the world, the US election is getting closer and President Trump has just gone to hospital with COVID-19. I think next week and even next month could be volatile.

There are some ASX shares that I’d be very happy to buy for the long-term if there’s another sizeable decline:

Altium Limited (ASX: ALU)

Altium is a leading electronic PCB software business. The ASX share has been growing strongly over the past decade, but COVID-19 has harmed short-term growth. The company was focused on growing its subscriber numbers so that it can continue to aim for clear market leadership by 2025.

In FY20 the ASX share grew its subscription base by 17% to 51,006 with the number of new Altium Designer seats sold rising by 15% to 9,251. FY20 revenue only increased by 10% and normalised earnings per share (EPS) only grew by 5% (which ignores a one-off tax change).

The Altium share price has risen 42% since the 23 March 2020 low. It’s looking fairly pricey at 61x FY21’s estimated earnings. So I’d be much more inclined to buy Altium shares if it was at least 10% lower and closer to $30. 

Over the long-term I think Altium can continue to grow with its strong balance sheet, quality client list and growing subscriber numbers. I’m just waiting for a better price. 

Pro Medicus Ltd (ASX: PME)

Pro Medicus is another of the ASX’s best businesses in my opinion. It provides a number of services in healthcare imaging IT. The ASX share is a provider of radiology information systems (RIS), picture archiving and communication systems.

The company is steadily winning more big clients, with the latest one being NYU Langone Health. More revenue is really beneficial for Pro Medicus because it has one of the highest earnings before interest and tax (EBIT) margins on the ASX. In FY20 it had an EBIT margin of 52.5%. It’s also debt free with a growing cash balance – which was up 34.3% to $43.4 million in FY20.

A lot of the new revenue simply falls to the bottom line. I like that the company is looking to expand into new markets, which increases its addressable market.

The Pro Medicus share price fell to $13.86 in the COVID-19 crash, but it has soared 77% since then.

COVID-19 isn’t really hurting Pro Medicus and it still has a very high price/earnings ratio. It’s trading at 95x FY21’s estimated earnings.

If the ASX share was trading close to $22 (or under) then I’d be more interested in buying Pro Medicus shares.

WAM Microcap Limited (ASX: WMI)

Small cap shares are usually hit harder during a market crash, so I think they can be better buying opportunities.

WAM Microcap has been a strong performer since it listed with a gross portfolio return of 21.7% per annum before fees, expenses and taxes.

The listed investment company (LIC) owns dozens of very promising small cap ASX shares. Some of the names in its portfolio at 31 August 2020 included Marley Spoon AG (ASX: MMM), People Infrastructure Ltd (ASX: PPE), Redbubble Ltd (ASX: RBL) and Temple & Webster Group Ltd (ASX: TPW).

During March 2020 the WAM Microcap share price plunged to $0.85 and it has surged 88% since then.

If WAM Microcap shares were to drop heavily, it would be one of the first ASX shares that I’d be looking at to buy for my portfolio.

Foolish takeaway

Pro Medicus is the ASX share that I’d like to buy the most, it’s the only one not in my portfolio at the moment. But of the three, I think I’d pick WAM Microcap today because of its diversification to many different businesses and it’s probably trading fairly closely to its net tangible assets (NTA).

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Tristan Harrison owns shares of Altium and WAM MICRO FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends 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. 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.

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