No one knows when the next ASX share market crash is going to happen. That's why it's a surprise. But, if share prices were to fall, I think there are quite a few names I'd want to invest in.
For me, a few different factors can make a great investment – choosing something that's growing its underlying intrinsic value, buying it at a good price and being patient to enable compounding to do its thing.
Being patient is up to the investor, as is identifying good investments. But, I think times of market crashes can open up some big opportunities. If the following ASX shares dropped 20% or more, I'd definitely want to think about buying them.
Pro Medicus Limited (ASX: PME)
The Pro Medicus share price has performed remarkably well since the start of 2022 and amid rising interest rates, it's only down 11% for the year.
It provides imaging IT, offering services and solutions to hospitals, imaging centres and healthcare groups around the world. This business can enable healthcare professionals to evaluate images remotely thanks to its cloud-based, high-performance platform.
The business is winning major new contracts in the United States and Europe. It's also renewing contracts at a higher fee rate, which is good for organic revenue growth and improving margins.
This ASX share has an earnings before interest and tax (EBIT) margin of over 60%, meaning that a lot of new revenue turns into profit. It's rapidly growing its dividend for shareholders.
A problematic sticking point is the valuation. According to CommSec, the Pro Medicus share price is valued at 104x FY23's estimated earnings. Even if it fell 20%, it could still seem pretty pricey.
Altium Limited (ASX: ALU)
Altium is another ASX share that is performing strongly internationally.
It provides software for the design of printed circuit boards (PCBs). The company has other areas of business, including Octopart which is a search engine for electrical parts.
This business is benefitting from the world becoming increasingly technological. It has some of the most advanced organisations in the world as customers, such as NASA, Space X, Tesla, Boeing, Lockheed Martin, Apple, Disney, Alphabet (Google) and Amazon.com.
It's expecting to achieve double-digit revenue growth in the next few years as it grows. The company is thinking it's going to achieve scale benefits, leading to a higher earnings before interest, tax, depreciation and amortisation (EBITDA) margin.
I think it's on course for a very promising upcoming decade, but it's currently at a fairly high earnings multiple, so a 20% plus fall would make it seem even more appealing. According to CommSec, it's valued at 55x FY23's estimated earnings.
IDP Education Ltd (ASX: IEL)
IDP Education is an ASX share that provides international student placement and international English language testing.
I think it's a very high-quality business with a lot of earnings leverage. As its revenue is recovering post-COVID, the net profit is growing much quicker. In FY22, total revenue grew by 50%, while net profit after tax (NPAT) surged 161% to $102.8 million.
The business is investing in improved services for its clients, as well as adding more centres to its global network and introducing international English language testing.
However, the IDP Education share price has jumped since the COVID-19 crash as well as from the mid-June 2022 low. According to CommSec, it's priced at 46x FY23's estimated earnings, so it'd be more attractive if it dropped over 20%.
