The Altium Limited (ASX: ALU) share price is dropping heavily, is it now cheap?
Altium is an Australian multinational software business that was founded in 1985. It now has offices globally in places like San Diego, New York, Boston, Munich, Shanghai, Tokyo and Sydney. Its software focuses on electronics design systems for 3D PCB design and embedded system development. Its services include Altium Designer, Altium Vault, CircuitStudio, CircuitMaker, TASKING and Octopart.
Altium’s Share Price Is Falling Rapidly
The Altium share price is down 6.25% in early trading this morning. It is down over 12% so far this week from Monday and it has fallen over 15% over the past week.
One of the most common, and best, pieces of investment advice is to be fearful when others are greedy and greedy when others are fearful. Plenty of people seem fearful this week, but will that affect Altium’s underlying operations?
Many of Altium’s clients are global businesses that require a supportive global economy to keep growing. But I’d imagine most of them will continue to develop their products and services, even if the global economy looks a bit shaky in the shorter term. If they didn’t they wouldn’t make any progress with their business.
After the US Federal Reserve and the Reserve Bank of Australia (RBA) cut interest rates it’s arguable that many assets should be valued higher than before, at least a little.
Altium is exposed to a few very positive factors like the growth of the ‘Internet if Things’ and an increasing amount of advanced electronics in many areas of life & machinery.
If the company achieves its long term market dominance goal and hits 100,000 Altium Designer subscribers in a few years then Altium’s profit could keep growing at a fast pace.
Is Altium A Buy?
But the key question is whether Altium is a buy at today’s price. It is down around 5% and according to CommSec is valued at 46 times the estimated earnings for the 2020 financial year.
I like to buy things at an attractive price, so ideally I would want it to be under $25 if not closer to $20 before buying.
Unless it gets there, I would rather consider investing in the growth shares in the free report below instead.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: Jaz owns shares of Altium at the time of writing, but this could change at any time.