Altium (ALU) is a developer of Printed Circuit Board (PCB) design software, ‘Altium Designer’ being its biggest seller. Formerly of Tasmania Altium now have offices in Sydney, San Diego, China, Germany and the Netherlands. ALU’s software is used to design products across any industry involving electronics.
Customers include Tesla, Siemens, Lenovo, Cochlear and NASA. The company is in a strong position to benefit from the ever increasing use of electronics in our lives. Currently the company has ~10% of the world market for PCB design – the emergence of superior competitors remains Altium’s biggest risk. So far tiny Altium with a market cap of just over $800m has been able to eat market share away from Japanese and American industry Goliaths with market caps of over $25Billion.
With sales growing by 48%pa over the last 5 years. Revenues are primarily recurring in the form of annual subscriptions. Their balance sheet is strong allowing the ability to make acquisitions or pursuit capital management initiatives. The company’s PE of 27x is justifiable given the companies past growth and future potential. I consider ALU a high quality company if you’re looking for growth and long term potential. Our research has a 12 month target of $7.22 on Altium.