There are some S&P/ASX 200 Index (ASX: XJO) tech shares that I believe could make great investments if they were a bit cheaper.

It has been a strange last 18 months or so. While plenty of ASX 200 tech shares were among the best performers during the COVID-19 pandemic, a number of tech names suffered a sell-off in 2022.

However, pleasingly for shareholders, some of the strongest players in the tech space have gone through a recovery.

I think that both of the below names, global leaders at what they do, would make very attractive investments, particularly if they were 20% cheaper.

Altium Limited (ASX: ALU)

Altium is a leader at providing electronic PCB design software around the world.

The ASX 200 tech share has done well over the past year, rising by around 25%.

I think that the company is doing everything right to succeed. Altium is spending on marketing and software development on existing products, while its newer offerings are showing very promising signs of growth, including the online cloud platform called Altium 365. Electrical parts search engine Octopart has also grown substantially over the past few years.

The FY23 half-year result showed growth in all the right areas. Revenue rose 17% to US$119.5 million and the earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved from 34.1% to 36.2%. This helped earnings per share (EPS) rise 29% to 22.53 US cents and the interim dividend was boosted by 19% to 25 Australian cents.

In FY23, the ASX 200 tech share is expecting to grow revenue by between 15% to 20%, with the cloud platform segment expecting revenue growth of between 20% to 30%.

Over the next few years, Altium is expecting to approximately double its revenue, while increasing profit margins.

However, while I am a shareholder and very optimistic about its future, its valuation reflects a lot of the potential. According to Commsec, it's valued at 62 times FY23's estimated earnings. So, it would be even better to buy shares if it were 20% cheaper.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne describes itself as Australia's largest enterprise software company, with locations globally.

It provides a global software as a service (SaaS) enterprise resource planning (ERP) solution that "transforms business and makes life simple" for customers. The ASX 200 tech share has over 1,200 leading corporations, government agencies, local councils and universities,

I think that TechnologyOne's earnings could be really defensive, even in a downturn. Businesses, governments and so on still need to use software, even if the GDP or the share market goes backwards.

The world continues to digitise, which I think is a strong tailwind for a business that is helping enable that. Saving organisations' time, enabling more efficiencies and providing accessibility is valuable, so it doesn't surprise me that TechnologyOne has such a high retention rate and customers want more of TechnologyOne's software over time.

In the half-year result for the six months to September 2022, total revenue rose 18% to $369.4 million and net profit after tax (NPAT) grew by 22% to $88.8 million.

The company's profit before tax margin was 32% and this is expected to rise to 35% in the coming years thanks to "significant economies of scale".

The ASX 200 tech share is valued at 53 times FY23's estimated earnings according to Commsec, so being able to own shares at a 20% discount to today's price would be welcome.

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Are you wanting to make some new additions to your portfolio?

If you are, then analysts think the two ASX 200 shares listed below could be worth considering. Here's why these shares are rated as buys:

Altium Limited (ASX: ALU)

The first ASX 200 share that could be a great buy and hold option is Altium.

Altium is a software company that focuses on electronic design systems for 3D printed circuit board (PCB) design and embedded system development. It is used by design teams of all shapes and sizes. This includes the likes of BAE Systems, Dell, Microsoft, NASA, and Tesla.

Thanks to favourable industry tailwinds and its leadership position, management is forecasting strong revenue growth in the coming years. It is is aiming to achieve US$500 million in revenue by 2026, which will be more than double FY 2022's revenue of US$220.8 million.

Morgan Stanley is a fan of the company. It currently has a buy rating and $43.50 price target on its shares.

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat could be another ASX 200 share to buy and hold.

It is a gaming technology company with a portfolio of industry-leading poker machines, a lucrative digital business, and a fledgling real money gaming business. The latter recently launched with a deal with BetMGM.

Goldman Sachs is confident in the company's long term outlook. This is due to Aristocrat "holding a top 3 spot in slot machine sales in the US, having a strong digital gaming offering, and now launching into the growing iGaming market."

Goldman has a buy rating and $42.80 price target on its shares.

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Next Monday, 6 March, is set to be a big day for ASX 200 dividend shares and their investors. We have not one, not two, but five ASX 200 shares scheduled to trade ex-dividend on the first trading day of the week next week.

When a company goes ex-dividend, it cuts off new investors from eligibility for its next dividend payment. So if you want to secure a company's latest dividend cheque, you need to own the shares of the company in question before its ex-dividend date.

So that gives you until the end of today's trading if you want to see some income from any of these five ASX 200 dividend shares:

5 ASX 200 shares going ex-dividend on Monday

Ramsay Health Care Limited (ASX: RHC)

ASX 200 healthcare giant Ramsay is first up for analysis today. This hospital operator just announced an interim dividend of 50 cents per share, fully franked. That's a nice increase over last year's interim dividend of 48.5 cents per share.

But investors will have to be quick if they want to see this dividend hit their bank accounts. The pay date is set for 30 March. Right now, Ramsay shares have a dividend yield of 1.48%.

QBE Insurance Group Ltd (ASX: QBE)

ASX 200 insurance heavyweight QBE is next up. QBE declared a fully-franked final dividend of 30 cents per share when it delivered its latest earnings report last month.

This is one of the largest dividends QBE has ever paid out, but again, the eligibility window is fast closing. Payday will then come around on 14 April. QBE shares offer a dividend yield of 2.58% today.

REA Group Ltd (ASX: REA)

Online real estate marketplace operator REA Group is another ASX 200 share going ex-div on Monday. In REA's case, investors can look forward to the interim dividend of 75 cents per share, fully franked, on 21 March.

This interim dividend is the same payment investors enjoyed in March last year. REA shares have a dividend yield of 1.37% right now.

Altium Limited (ASX: ALU)

ASX 200 tech share Altium is next up for a look. The tech sector has not traditionally been a strong source of dividend income for ASX investors, but Altium is a happy exception. Its next interim dividend will be a payment of 25 cents per share, partially franked at 40%.

That's a pleasing rise over last year's interim dividend of 21 cents per share (although that one was fully franked). This dividend will be arriving on 21 March later this month. At present, Altium share price has a dividend yield of 1.31%.

Bendigo and Adelaide Bank Ltd (ASX: BEN)

Our final ASX 200 share that's going ex-dividend on Monday is also our highest yielder. Bendigo and Adelaide Bank declared an interim dividend of 29 cents per share last month, fully franked, to be paid out on 31 March.

This interim dividend represents another pleasing hike over last year's corresponding payment of 26.5 cents per share. Bendigo Bank offers a dividend yield of 5.80% right now.

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Are you looking to add some growth shares to your portfolio this month?

If you are, three ASX growth shares that could be worth considering are listed below. Here's why analysts are tipping them as buys:

Altium Limited (ASX: ALU)

The first ASX growth share to consider buying is Altium. It is an an industry-leading printed circuit board (PCB) design software provider. PCBs are the boards you find inside almost all electronic devices and are integral to their operation. And as they come in all shapes and sizes, specialist software is required to design them. Thanks to Altium's dominant position in the market, management appears confident in its outlook and is aiming to more than double its revenue to US$500 million by 2026.

Morgan Stanley is positive on the company. It currently has a buy rating and $43.50 price target on its shares.

Aristocrat Leisure Limited (ASX: ALL)

Another ASX growth share to consider buying this month is Aristocrat Leisure. It is one of the world's leading gaming technology companies with a world class portfolio of poker machines and digital/mobile games. The latter has 5.5 million daily active users playing games such as Cashman Casino, Gummy Drop, EverMerge, Mech Arena, and RAID. Aristocrat is also undertaking a major (recently extended) share buyback and has expanded into the real money gaming market with a deal with MGM.

Citi is a fan of the company and has a buy rating and $41.20 price target on its shares.

Life360 Inc (ASX: 360)

A final ASX growth share that has been named as a buy is Life360. It is a location technology company behind the eponymous Life360 app, which has over 40 million active users. This app offers families features such as communications, driver safety, and location sharing. Goldman Sachs is very bullish on the company due to its leadership position and massive market opportunity. It notes that "Life360 is exposed to a US$12bn global TAM with a large opportunity to expand its product suite, grow average revenue per paying circle (ARPPC), increase payer conversion, and lift penetration rates outside of the US."

The broker currently has a buy rating and $7.90 price target on the company's shares.

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While most investors rightly focus on business performance or structural tailwinds in picking ASX shares to buy, there is another factor that could materially boost the fortunes of a stock.

That is takeovers.

"Identifying companies that will make suitable takeover targets can make for very lucrative investments," Wilsons equities strategist Rob Crookston said in a memo to clients.

"Normally, companies are acquired at a significant premium to their latest share price, and any hint of a possible acquisition can trigger positive momentum even before a bid is announced."

After 2022 saw many non-mining S&P/ASX 200 Index (ASX: XJO) shares fall in value, big institutional investors like superannuation funds and private equity firms are "still on the hunt for high-quality assets at a fair price".

Growth stocks slashed to clear

One set of companies that are "vulnerable" to acquisitions are growth stocks.

It's because they are going for cheap at the moment.

"These stocks have underperformed during periods of rising bond yields and outperformed when bond yields have fallen," said Crookston.

"2022 was no different. The quick-fire rise in bond yields was a significant headwind for growth stocks in 2022."

To demonstrate, the S&P/ASX All Technology Index (ASX: XTX) is still more than 33% lower than November 2021, despite a 10% revival this year.

Crookston noted that takeover bids have already been seen for technology shares such as Nitro Software Ltd (ASX: NTO), Tyro Payments Ltd (ASX: TYR), and ELMO Software Ltd (ASX: ELO).

The next great takeover targets?

So Wilsons analysts set out to find the ASX 200 shares that might become the next takeover targets.

"Our search is looking for more of these opportunities at the larger end," said Crookston.

"We have looked for stocks that have derated significantly over 2022 that offer substantial growth potential."

These are the seven ASX companies that Crookston's team came up with:

• Xero Limited (ASX: XRO)
• Domain Holdings Australia Ltd (ASX: DHG)
• PEXA Group Ltd (ASX: PXA)
• Netwealth Group Ltd (ASX: NWL)
• Iress Ltd (ASX: IRE)
• Altium Limited (ASX: ALU)
• NEXTDC Ltd (ASX: NXT)

The analysts said that Domain is attractive for acquisition because of its "strong market position" that's effectively a duopoly.

"Looks oversold on negative housing sentiment, but likely to grow earnings over the cycle."

Cloud accounting software provider Xero has seen its share price halve since November 2021.

"High multiple might deter but has de-rated heavily over the year," read the Wilsons memo.

"SaaS [software as a service] business with recurring revenue. Strong growth with the potential for substantial cost out."

Another software company, Altium, is undergoing some pain at the moment but will be tempting for savvy institutional investors seeking growth in the medium term.

"Transition to SaaS business causing slight disruption (margins contraction) but should be short-term," read the memo.

"High quality business that is taking market share."

The post 7 ASX 200 growth shares to buy for possible takeovers: expert appeared first on The Motley Fool Australia.

Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price is down a further 5% to $6.14. This morning, the team at Credit Suisse responded to this infant formula company's half-year results by downgrading its shares to an underperform rating with a $5.10 price target. Its analysts have concerns that overall infant formula demand could fall materially in China in 2023.

Altium Limited (ASX: ALU)

The Altium share price is down 6% to $37.60. This follows the release of the electronic design software company's half-year results after the market close on Monday. Although Altium's earnings came in ahead of expectations, investors appear to be focusing more on its revenue, which was softer than consensus estimates.

CogState Limited (ASX: CGS)

The Cogstate share price was down 14% to $1.63 before being hurried into a trading halt. Management advised that the trading halt has been requested so the digital brain health assessments company can respond to a price query request from the ASX. Its shares are now down almost 30% in a week without any news.

Ingenia Communities Group (ASX: INA)

The Ingenia share price is down 13% to $4.03. This morning, this retirement and holiday communities developer released its half-year results and reported a 24% increase in earnings before interest and tax (EBIT) to $42 million. However, it expects a tough second half and has downgraded its EBIT growth guidance to between flat and 10%. This compares to its previous guidance of 30% growth.

The post Why A2 Milk, Altium, Cogstate, and Ingenia shares are sinking today appeared first on The Motley Fool Australia.

In morning trade, the electronic design software company's shares are down 6% to $37.43.

Why is the Altium share price sinking?

Investors have been selling down the Altium share price today following the release of the company's half year results after the market close on Monday.

In case you missed it, Altium reported a 17% increase in revenue to US$119.5 million and a 30% jump in net profit after tax to US$29.6 million.

The company's top line growth was driven largely by a 16% increase in Design Software revenue to US$91.6 million and a 22% increase in Octopart revenue to US$27 million.

Whereas its bottom line growth reflects the benefits of operating leverage, which boosted its EBITDA margin up 2.1 percentage points to 36.2%.

This allowed Altium to declare an interim dividend of 25 Australian cents per share, which is up 19% on the prior corresponding period.

Finally, the company has reaffirmed its full year guidance for total revenue of US$255 million to US$265 million, which represents 15% to 20% annual growth. Altium also continues to expect an underlying EBITDA margin of 35% to 37%.

Broker reaction

The team at Bell Potter was relatively pleased with Altium's result. However, it notes that the company missed on the top line but beat on the bottom line.

The broker commented:

1HFY23 revenue grew 17% to US$119.5m but was 2% below our forecast of US$121.6m. The miss was driven by a mix of currency and lower than expected revenue in Russia and China.

EBITDA grew 24% to US$43.3m and was 4% ahead of our forecast of US$41.7m. The beat was driven by lower expenses than forecast (US$77.3m vs BPe US$80.4m) which resulted in a higher than forecast EBITDA margin (36.2% vs BPe 34.3%). Cash flow was strong with operating cash flow exceeding NPAT and this was despite a hike in tax paid (US$9.6m vs US$3.4m in the pcp). The interim dividend increased 19% to A25.0c 40% franked which was ahead of our forecast of A23.0c unfranked.

In response to the result, Bell Potter has retained its hold rating with an improved price target of $42.50.

Over at Goldman Sachs, its analysts echoed Bell Potter's view. It commented:

ALU reported 1H23 Sales/EBITDA that was -1%/+1% vs. GSe, with weaker Octopart and License revenues offset by solid B&S pricing and cost control.

The broker also notes that "subscriber performance was marginally weaker than expected," which could be what is putting a bit of pressure on the Altium share price today.

Goldman has retained its neutral rating and $42.00 price target.

The post Why is the Altium share price sinking 6% today? appeared first on The Motley Fool Australia.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to give back yesterday's gains and more on Tuesday following a poor start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 28 points or 0.35% lower. In late trade in the United States, the Dow Jones is up 0.4%, but the S&P 500 is down 0.3% and the NASDAQ is down 0.6%.

Oil prices rise

Energy shares Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a decent day after oil prices stormed higher overnight. According to Bloomberg, the WTI crude oil price is up 1.15% to US$77.22 a barrel and the Brent crude oil price is up 1.2% to US$83.99 a barrel. Traders appear to believe oil prices were oversold after another heavy decline last week.

Altium half-year result

The Altium Limited (ASX: ALU) share price will be one to watch on Tuesday. This follows the release of the electronic design software company's half year results after the market close on Monday. Altium reported a 17% increase in revenue to US$119.5 million and a 30% jump in net profit after tax to US$29.6 million. Goldman Sachs commented: "In-line result drives minor changes; pricing and Octopart yield offset weaker than expected volumes."

Gold price edges higher

It could be a subdued day for gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) after the gold price edged ever so slightly higher overnight. According to CNBC, the spot gold price is up a fraction to US$1,850.3 an ounce. Traders appear unsure where gold is heading next given the outlook for interest rates.

BHP results

The BHP Group Ltd (ASX: BHP) share price will be in focus today when the mining giant releases its half year results. According to Goldman Sachs, its analysts expect "underlying EBITDA US$13.7bn vs. cons US$14.3bn (difference is GS lower on met & thermal coal; US$2.7bn vs. cons US$3.0bn, lower on Nickel West). NPAT US$6.9bn vs. cons US$7.0bn." The broker also expects an 88 US cents per share interim dividend, versus the consensus estimate of 98 US cents per share.

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

That's because the electronic design software company has released its half year results after the market close.

Altium share price on watch amid strong growth

• Revenue up 17% to US$119.5 million (22% in constant currency)
• Recurring revenue increased from 74% to 79% of total revenue
• EBITDA margin up 2.1 percentage points to 36.2%
• Profit after tax jumped 30% to US$29.6 million
• Interim dividend increased 19% to 25 Australian cents per share

What happened during the half?

For the six months ended 31 December, Altium reported a 17% increase in revenue to US$119.5 million.

A key driver of this was a 16% increase in Design Software revenue to US$91.6 million. This reflects an 11.5% increase in average subscription seat value to US$2,304 and a 3.7% lift in subscriptions to 58,030. Solid revenue growth was achieved in all regions but China, which went backwards due to COVID lockdowns.

The Octopart business was also on form, delivering a 22% increase in revenue to US$27 million. This reflects an increase in average revenue per click to $1.96 from $1.55, which offset a moderation in clicks.

And with Altium benefiting from operating leverage following a period of restructuring, the company's earnings grew quicker than sales. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 24% to US$43.3 million and net profit after tax jumped 30% to US$29.6 million.

Altium's operating cash flow was strong at US$22.5 million, allowing the company's board to declare a 25 Australian cents per share interim dividend. This is up 19% on the prior corresponding period.

The company ended the period with a sizeable cash balance of US$205.3 million.

Management commentary

Altium's CEO, Aram Mirkazemi, was pleased with the company's performance during the half. He commented:

Altium delivered a strong financial result and is on track to achieve our full year guidance. This solid performance under challenging global macroeconomic conditions reflects Altium's dominance in the mid-market and growing competitive strength. We have added a net 2,052 seats to our subscription pool from one year earlier and increased Average Subscription Seat Value by $237. The primary drivers for the increase in Average Subscription Seat Value have come from the mainstream adoption of Pro and Enterprise capabilities and growing sales of term-based licenses.

Altium interim CFO, Richard Leon, added:

The strength of our EBITDA margin is evidence of a return to traditionally strong operating leverage following a period of restructuring for Altium. The cash-generative nature of our business is underpinned by growing recurring revenues and a value discipline approach to investments and cost management. Our transition to a business model focused on both design software and cloud platform continues to progress well with solid revenue growth driving bottom-line profitability.

Outlook

Altium has reaffirmed its FY 2023 guidance. It continues to expect:

• Total revenue of US$255 million to US$265 million (15% to 20% growth)
• Underlying EBITDA margin of 35% to 37%

The Altium share price is up 23% over the last 12 months. Shareholders will no doubt be hoping it continues this positive run on Tuesday.

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It's been a pretty horrible day for ASX shares and the S&P/ASX 200 Index (ASX: XJO) in general so far this Wednesday. At the time of writing, the ASX 200 has lost a nasty 1.06%, putting the index down to around 7,350 points.

But not all ASX 200 shares are in the wars today. In fact, let's talk about four that are not only rising, but have just hit new 52-week highs today.  

4 ASX 200 stocks at new 52-week highs on Wednesday

Altium Limited (ASX: ALU)

ASX 200 tech share Altium is one such company that is defying the market's gloom today. At present, the Altium share price has risen by a decent 1.94% to $39.70 a share. But earlier this morning, the software-as-a-service (SaaS) provider rose as high as $40.34. That's a new 52-week high for Altium shares.

We haven't had any news out of Altium itself for almost a month. So perhaps a rise in the US tech sector overnight is helping to boost sentiment for shares like Altium today. This company's shares are up a pleasing 15.4% year to date, so this could also be an extension of that trend.

Carsales.com Ltd (ASX: CAR)

Another ASX 200 tech share in Carsales is our next stock to check out. Carsales is also having a massive day today. The online marketplace operator has had a very bouncy day indeed. Carsales shares are presently deep in the red, nursing a 1.26% loss to $22.66 a share.

But this morning saw the company rocket, with the shares hitting $23.53 soon after open. That's Carsales' new 52-week high.

Investors have been showing a renewed appreciation of Carsales shares ever since the company announced its latest half-year earnings on Monday. Revenue, profits and earnings were all up across the board, and Carsales jacked up its interim dividend by almost 12%. So this probably explains today's new high.

Seven Group Holdings Ltd (ASX: SVW)

Next up we have the ASX 200 diversified investment company Seven Group. Seven is having a fantastic session this Wednesday. The company is currently up a healthy 3.03% to $24 a share but rose as far as $24.53 just before midday today.

This one is pretty clear. Seven has also just reported its own half-year earnings this morning. This saw a 16% rise in revenues, while net profits were up 17% and earnings per share (EPS) rose 18%. Obviously, investors have been impressed by what seven had to show.

Lottery Corporation Ltd (ASX: TLC)

Finally today, let's talk about ASX 200 gaming share Lottery Corporation. Lottery Corp shares are currently up by 0.9% at $5.04 each. But this morning saw this company rise as high as $5.10 per share. That's (you guessed it) a new 52-week high for Lottery Corp.

Unlike Carsales and Seven Group, we haven't had any earnings from Lottery Corp recently. So this rise appears to just be the result of some investor goodwill. Lottery Corp shares have been on the SX for less than a year. The company was spun out of Tabcorp Holdings Ltd (ASX: TAH) in May last year.

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Altium describes itself as a business that offers software tools that empower and connect PCB designers, part suppliers and manufacturers to develop and manufacture electronic products faster and more efficiently.

One of the key areas of Altium is the cloud platform Altium 365. The idea is that it will enable collaboration across the entire PCB design process.

Altium Designer is one of the main software offerings, as well as the electronic parts search engine called Octopart.

With that in mind, there are a few reasons that could make the business a global winner.

Investing for the future with strong tailwinds

Altium's business model is changing, with "strong" platform adoption driving recurring revenue and average subscription seat price. The number of monthly active users and accounts on Altium 365 is increasing.

Altium is steadily growing its global PCB market share, but the competitor with the largest market share is losing its advantage.

More devices, vehicles and so on are becoming more advanced as time goes on. This is giving Altium a tailwind because electronics is "at the heart of a smart and connected world."

Altium points to 5G connections, electrification of cars, autonomous driving, industrial internet of things (IoT), AI and data science, mobile devices and the general demand for "smart connected products are driving demand for electronics and continue to overburden supply chain."

The company said that Altium 365 is increasing the attractiveness of Altium's PCB design software resulting in greater demand and competitive advantage.

Impressive financials

Altium possesses some financial characteristics that are good signs of quality for the business and could help the Altium share price.

The amount of the ASX 200 tech share's revenue that is recurring rose to 75% in FY22, up from 65% in FY21. That locks in more revenue for the next year and makes the revenue more sticky.

Altium had an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 36.7% in FY22, up from 34.3% in FY21. A growing EBITDA margin is an attractive factor, particularly if the revenue of the business is growing quickly. FY22 revenue rose 23%.

The company is very good at generating cash flow. In the FY22 result, Altium saw its net profit after tax (NPAT) reach $55.5 million (up 57%) while operating cash flow was $72.5 million (up 17%).

Generating lots of cash gives the business ample funds to pay a good dividend, ensure a good balance sheet and pay for good research and development to design the next generation of software for subscribers.

Growth expected

The Altium share price has done well over the long term. But, with the company expecting earnings growth in the future, this could help drive the Altium share price further.

The ASX 200 tech share has some aspirational targets for FY26.

In FY23, it's expecting to generate total revenue of between $255 million to $265 million (up 15% to 20%). By FY26, it's hoping to reach $500 million – almost doubling.

It's hoping to reach an underlying EBITDA margin of between 38% to 40%, which means profit could grow even faster than revenue.

The business is also expecting to reach 100,000 software seats on subscription.

Altium share price valuation

According to Commsec, the business is valued at 60 times FY23's estimated earnings.

The post Why I think this ASX 200 tech share could turn into a global superstar appeared first on The Motley Fool Australia.

After all, although savings accounts are offering improved interest rates, this still doesn't come close to the potential returns on offer in the stock market.

But which ASX shares would be good options for this $1,000? Two that I would seriously consider are listed below:

Altium Limited (ASX: ALU)

I think Altium could be a great ASX share to buy. It is a software company that focuses on electronics design systems for 3D PCB design and embedded system development.

The Altium Designer software is regarded as the best in the industry and is used by leading electronic design teams from companies and organisations such as BAE Systems, Dell, Microsoft, NASA, and Tesla.

The company also has a number of businesses that complement its core offering. These are the NEXUS collaboration platform and the Octopart electronic parts search engine. Business has been booming for the latter recently because of parts shortages.

Altium certainly has come a long way over the last decade, but it still has plenty of growth ahead. For example, in the near term, the company is aiming to achieve US$500 million in revenue by 2026. This is more than double FY 2022's revenue of US$220.8 million. Furthermore, with management aiming to improve its margins over the same period, there's potential for its earnings to grow at an even quicker rate.

And while Altium's shares are not cheap at 68 times trailing earnings, and therefore carry a lot of risk, I still believe they represent good value relative to its growth outlook.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX share that I would invest $1,000 into is Universal Store. It is the fashion retail company behind the eponymous Universal Store brand. It also has the Perfect Stranger brand in its portfolio and recently completed the acquisition of Byron Bay-based fashion brand Thrills.

I think Universal Store is one of the best options in the retail sector right now. Not only are its shares attractively priced at 13 times estimated forward earnings, but the company appears better positioned than most for growth in the current environment.

This is thanks to its target market being younger consumers, which are expected to continue spending in 2023 due to increases in the minimum wage and their lack of exposure to rising interest rates.

The post If I had a spare $1,000, here's where I'd invest in the stock market now appeared first on The Motley Fool Australia.

The hype around artificial intelligence (AI) has never been more palpable. But with most AI companies located outside Australia and even fewer publicly listed, where can investors get a slice of AI stocks on the ASX?

We may not have the likes of Microsoft Corp (NASDAQ: MSFT) or Alphabet Inc (NASDAQ: GOOG) at our fingertips. However, Australia offers some high-quality businesses that may provide some exposure to the red-hot sector.

Find out what is catching my eye below.

The next frontier for productivity

Unless you have been living under a rock, you've probably heard of ChatGPT. The AI-powered chatbot owned by OpenAI became the fastest-growing consumer internet app in history in the past week — dethroning TikTok by reaching 100 million users in only two months.

Now, Microsoft, Google, and China search engine Baidu are all squabbling over which can implement the technology the quickest.

Critics may consider AI to be an overhyped fad, but the biggest tech companies in the world appear to be taking it seriously. In fact, Microsoft wasted no time integrating several new AI features into its browser yesterday, giving people the ability to leverage what it calls a 'co-pilot' directly in Microsoft Edge.

Which ASX stocks look ripe for the AI boom

In my opinion, the efficiency benefits of AI in the future will lend themselves to countless applications. As Microsoft CEO Satya Nadella states, "I think that this technology is going to reshape pretty much every software category."

That's why I'm personally keeping an eye on ASX stocks with their toes already in the AI industry.

TechnologyOne Ltd (ASX: TNE) is one such company that already makes use of the technology in its enterprise software solutions. If more enterprises see the value in AI, TechnologyOne could be well-placed to offer off-the-shelf solutions to its customers.

Another ASX stock offering AI-powered solutions is Imdex Limited (ASX: IMD). The company is a software provider to the mining industry, helping it make more informed decisions. One such product is their cloud-based AI spectral interpretation system named aiSIRIS.

Furthermore, Imdex currently trades at a price-to-earnings (P/E) ratio of 24. The valuation and its growth trajectory make it one company I'm seriously considering adding to my portfolio.

The final ASX stock with AI exposure that I think is appealing is circuit board design software company Altium Limited (ASX: ALU).

AI software ultimately needs hardware to run on. The company noted AI as a macro trend for driving increased demand for electronics in its 2022 full-year results.

Altium brings together a long tailwind, a history of executing on growth, and a commendable balance sheet. These ingredients combined make this ASX stock one I'd strongly consider for exposure to AI.

The post 3 unmissable ASX AI stocks on my radar right now appeared first on The Motley Fool Australia.

Higher interest rates and strong inflation are hitting businesses in many different ways.

While valuations of some ASX growth shares are still down significantly, the S&P/ASX 200 Index (ASX: XJO) as a whole isn't down much at all.

In fact, the ASX 200 is close to its all-time high. It had fallen quite a way by June 2022 and at the end of September 2022. But it has significantly recovered since then.

So, with the ASX 200 as a whole doing well, thanks to strong commodity prices and higher projected bank profits, I think the short-term opportunity there has already passed.

However, remember that the ASX 200 has returned an average of around 10% per annum over the ultra-long term. I believe that investors can still do well over the longer term with an exchanged-traded fund (ETF) focused on larger ASX shares, such as the Vanguard Australian Shares Index ETF (ASX: VAS) (though this ETF tracks the S&P/ASX 300 Index (ASX: XKO) ).

Can ASX shares still make mega returns?

Of course, the index is made up of different constituent businesses – the great performers and the ones going through tough times as well.

Over the last decade, names like CSL Limited (ASX: CSL), Pro Medicus Ltd (ASX: PME), and Altium Limited (ASX: ALU) have flourished.

I think there are probably going to be a few names on the ASX now that are on their journey to achieve very good returns. Time will tell which names end up being those big winners.

The Motley Fool can hopefully help identify those upcoming winners, but I think there are a couple of factors that will help generate stronger returns.

First, I'd look for a business that is looking to expand overseas because that increases the total addressable market. This gives the ASX share a bigger growth runway, meaning possible stronger returns. But it's also important to evaluate how effective the business could be at winning market share.

Second, I'd only want to go for businesses that seem like they have good gross profit margins with the potential to become very profitable in the future. I regularly write articles outlining some of the ASX shares that I think could perform very well.

I think smaller ASX shares have more room for growth because they are earlier on in their growth journey, with more compounding potential.

The post ASX shares: Is this my once-in-a-lifetime chance for mega returns? appeared first on The Motley Fool Australia.

In fact, some ASX 200 shares have climbed so much today that they have reached new 52-week highs.

Here are eight that accomplished this feat on Thursday:

Altium Limited (ASX: ALU)

The Altium share price has hit a 52-week high of $39.96 on Thursday thanks to a rebounding tech sector.

Auckland International Airport Limited (ASX: AIA)

The Auckland International Airport share price has risen to a 52-week high of $7.90 this afternoon. Investors appear optimistic that this airport operator will be benefitting greatly from the travel market recovery.

CSL Limited (ASX: CSL)

The CSL share price has continued its positive run and climbed to a 52-week high of $304.75. Morgans is tipping 2023 to be a "break-out" year for the biotherapeutics giant.

Lottery Corporation Ltd (ASX: TLC)

The Lottery Corporation share price has hit a 52-week (and record) high of $4.91 on Thursday. Last week, Macquarie reiterated its outperform rating with an improved price target of $5.10.

Northern Star Resources Ltd (ASX: NST)

The Northern Star share price has hit a 52-week high of $13.31. As you can see below, this means the ASX 200 gold miner's shares are now up 52% over the last 12 months.

Pro Medicus Limited (ASX: PME)

The Pro Medicus share price is on form again and charged to a 52-week (and record) high of $67.99. A rebounding tech sector and some big contract wins have sent this ASX 200 healthcare technology company's shares hurtling higher.

Telstra Group Ltd (ASX: TLS)

The Telstra share price has risen to a 52-week high of $4.18. Earlier this week, Goldman Sachs upgraded the telco giant's shares to a buy rating with a $4.60 price target.

WiseTech Global Ltd (ASX: WTC)

The WiseTech share price has stormed to a 52-week (and record) high of $64.70 this afternoon. This brings the ASX 200 tech share's 12-month return to a sizeable 40%.

The post Happy days! 8 ASX 200 shares smashing new 52-week highs on Thursday appeared first on The Motley Fool Australia.

So, that gives us a bit of time to look at some of the ASX shares that Goldman Sachs is tipping to outperform or underperform expectations this month.

Potential to outperform

Goldman believes that the following ASX shares have the potential to outperform the market's expectations in February. Here's what it is saying:

Breville Group Ltd (ASX: BRG)

The broker has warned short sellers that this appliance manufacturer could surprise to the upside with its full year guidance this month when it releases its half year results. It said:

On Discretionary our top pick remains Breville – De'Longhi 4Q came in better than expected and the stock is likely to short squeeze on stronger than expected full year EBIT guidance at 1H23 results.

Temple & Webster Group Ltd (ASX: TPW)

Its analysts are also very bullish on this online furniture and homewares retailer. In fact, the broker not only expects a stronger than consensus half year result, it is expecting Temple & Webster to outperform over the medium term. The broker commented:

Our FY23/FY24/FY25 revenue forecasts are +2.6%/+5.2%/+3.9% ahead of the market (Visible Alpha Consensus Data). We are more constructive around the medium term revenue outlook despite category level headwinds.

Woolworths Group Ltd (ASX: WOW)

Goldman is expecting this retail giant to deliver a strong result this month. In light of this, it appears to believe the market is being too negative and that it deserves to trade on higher multiples than its arch rival. It said:

We expect an outperformance trend for WOW vs. COL in comp sales see margins beginning to come through from 2Q23 on stronger omni-channel Xmas trading as well as more targeted promotions. On GSe, WOW is trading at a similar FY23E P/E vs. COL.

At risk of underperforming

Unfortunately, Goldman isn't very positive about the prospects of these ASX shares this month. Here's why it is tipping them to underperform expectations:

Altium Limited (ASX: ALU)

This electronic design software platform provider has been tipped to fall short of the market's expectations during the first half. Goldman is expecting Altium to deliver first half EBITDA of US$43 million, which is 3.6% short of consensus estimates. Its analysts are then expecting the same for its full year earnings.

Coles Group Ltd (ASX: COL)

Another ASX share that could underperform expectations according to Goldman Sachs is Coles. It believes that margin compression is weighing on the supermarket giant's performance. As a result, although it expects Coles' sales to be a fraction ahead of the market's estimates in FY 2023, its net profit assumption is 5.2% lower than the consensus. For the first half, Goldman said:

In 1H23, we expect group sales growth of 3.7% and EBIT growth of 0.4% as we expect ~10bps margin compression to 4.6% EBIT margin.

Wesfarmers Ltd (ASX: WES)

Finally, Goldman isn't feeling very positive on this conglomerate's prospects this month due largely to its Bunnings business. It warned:

We remain Sell-rated on WES as weaker home improvement trend and negative comps in 2H23 with Bunnings, at highest risk of volume deleverage impacting EBIT margins.

The post Goldman reveals the ASX shares that could surprise to the upside (and downside) this reporting season appeared first on The Motley Fool Australia.

Over the last month, the NASDAQ-100 went up by 10.6%.

In January 2023, we saw the Xero Limited (ASX: XRO) share price climb by more than 9%.

The REA Group Limited (ASX: REA) share price went up by over 13%.

The Seek Ltd (ASX: SEK) share price rose by more than 15%.

The Carsales.com Ltd (ASX: CAR) share price climbed over 9%.

The WiseTech Global Ltd (ASX: WTC) share price rose 19%.

The Altium Limited (ASX: ALU) share price went up 10%.

Looking at the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC), an exchange-traded fund (ETF) that's invested in 46 ASX tech shares, saw a rise of over 9% in the month.

Why are ASX tech shares doing so well?

Technology businesses were one of the hardest hit in 2022 as interest rates zoomed higher.

But, there are signs that inflation may have peaked and could now be reducing.

For example, in the US in the three months to December 2021, the Employment Cost Index rose by 15%, which was less than the 1.1% expected number and a slowdown from the 1.2% in the prior three months, according to reporting by the Australian Financial Review.

The AFR quoted National Australia Bank Ltd (ASX: NAB) head of fixed income research, Skye Masters, who said:

The clear point from this data is it's showing that wages growth in the US is easing.

So, it does alleviate that concern that some Fed members might have had that maybe we're entering into a wage price spiral, so it's supportive of the view that the Fed can dial back its pace of tightening and possibly pause.

The AFR also reported on comments from Matt Wacher, chief investment officer at Morningstar for the Asia Pacific, who said that while the Reserve Bank of Australia (RBA) could increase the cash rate one or two more times, there could then be a cut later this year. Wacher commented:

I am sure the RBA would like to keep rates higher for longer, but this can put significant pressure on the economy here, more so than other regions given personal debt levels.

On the ASX tech share space, he said that the shares are "not cheap, even though they had fallen sharply, and are priced to perfection", according to the newspaper.

My take

I don't think the US Federal Reserve is going to make things easy for the share market.

Jerome Powell has promised to fight inflation "until the job is done". I think that means that interest rates are going to stay high for longer than some investors are expecting. This is what he said a few months ago:

But, with many valuations still a long way below their 2021 levels, I think a number of ASX tech shares, like Xero, seem very promising for the long term even if they have risen a bit higher than a month ago.

Keep this in mind: it may not really matter what happens in February 2023 if the investment horizon is five years or more ahead with an ASX (tech) share.

The post The Nasdaq just had its best January in over 20 years. Are ASX tech shares back? appeared first on The Motley Fool Australia.

Now, don't get me wrong. Investing $2,400 in the first 12 months isn't suddenly going to unlock $20,000 of annual dividends. It will take some time, but I believe that it's possible.

Compounding is a very powerful financial force, which can enable smaller amounts to grow into much larger amounts. Albert Einstein once supposedly said:

Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn't…pays it.

For example, using a compound interest calculator, investing $200 a month for 40 years, returning an average of 10% per annum, turns into $1.06 million. That only requires $96,000 of money from the investor – the rest (in this example) comes from compounding returns.

But, I don't think someone needs $1 million to make $20,000 of annual income. A portfolio with a yield of 4% would only need to be half the size ($500,000) to make $20,000, while a 6% yield would only need to be $333,334 in size to make $20,000.

How I'd invest in ASX shares

There are a few principles that I'd take into this investing plan.

First, I'd take a brave attitude when it comes to market crashes. Volatility regularly happens. If I'm invested in good businesses, a temporary dip (even a big one) won't bother me. In fact, I would see lower prices as an opportunity to buy, rather than panic and sell. It's during those times that the best prices can be found.

Second, I would want to consistently invest, through the ups and downs into the best opportunities I could see with a dollar cost averaging (DCA) strategy. While share prices are always changing, I think there'll always be at least one idea that could be a good opportunity.

Third, I'd only invest in businesses that seem as though they have a good potential to grow earnings and dividends. I think it's the businesses that are growing their underlying value that have the best chance of achieving share price growth and good dividends over time.

For example, several years ago I invested in Altium Limited (ASX: ALU) shares when the dividend yield was more than 3%. Since then, the dividend (and profit) has grown enormously and my yield-on-coast is much higher. In 2014 it paid an annual dividend of 12 cents per share and in FY22 it paid an annual dividend of 47 cents per share.

Some of the names I believe can provide a good combination of dividends and growth in the coming years include Adairs Ltd (ASX: ADH), Premier Investments Limited (ASX: PMV), Beacon Lighting Group Ltd (ASX: BLX), Lovisa Holdings Ltd (ASX: LOV), Healthia Ltd (ASX: HLA), Bailador Technology Investments Ltd (ASX: BTI) and Propel Funeral Partners Ltd (ASX: PFP).

The post How I'd invest $200 a month in ASX shares to make a $20,000 passive income for life appeared first on The Motley Fool Australia.

Most companies inside the S&P/ASX 200 Index (ASX: XJO) can attest to paying dividends to some extent. However, when I'm on the hunt for dividend gems, I'm looking for ASX shares that are rapidly growing their dividends.

It is often companies with a low dividend yield that are overlooked. But, when a low yield is combined with a blistering high rate of dividend growth, the long-term outcome can be shockingly good.

A yield of as little as 1% can become 6% equivalent over 10 years — assuming the same share price — if it increases by 20% each year.

That's why I'd be taking a close look at this not-so-secret ASX tech share…

ASX 200 dividend aristocrat in the making

Many will be familiar with the circuit board design software provider Altium Limited (ASX: ALU). The ASX tech share came to prominence during the heyday of Australia's 'WAAAX' shares. Though, few probably appreciate the dividend component of this mighty company.

At a paltry 1.2% dividend yield, Altium isn't touting a bank-beating income profile. However, yield is only one aspect that could lead investors astray. Instead, I'd focus on the fact that this company has grown its dividend for 10 years straight, as shown below.

Not only has Altium simply grown its dividends… it has significantly grown its dividends. When looking at the ASX 200 shares that have delivered a 10-year compound annual growth rate (CAGR) on their dividends per share greater than 20%, Altium is one of only 10 companies that meet the high bar.

Unlike other companies that fall into this bucket — such as South32 Ltd (ASX: S32), Fortescue Metals Group Limited (ASX: FMG), and Northern Star Resources Ltd (ASX: NST) — Altium isn't exposed to the extremely cyclical resource industry.

If Altium were to continue this trend for 15 more years, the ASX 200 share could potentially join a select group known as 'dividend aristocrats'.

Look for continued growth

Altium is expected to release its first-half results for FY23 on 20 February. It will be important to see that the company is continuing to deliver on its growth ambitions. The ultimate target is US$500 million in revenue by 2026.

If the company can hit these milestones, I suspect Altium could become a highly prized ASX 200 dividend share.

The post Could this ASX 200 share be a dividend gem hiding in plain sight? appeared first on The Motley Fool Australia.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to rise gain

The Australian share market looks set to rise again on Monday following a strong finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 34 points or 0.45% higher this morning. On Wall Street, the Dow Jones was up 1%,the S&P 500 rose 1.9%, and the NASDAQ jumped 2.65%.

Oil prices rise

It could be a good start to the week for ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) after a solid finish to last week for oil prices. According to Bloomberg, the WTI crude oil price was up 1.3% to US$81.64 a barrel and the Brent crude oil price rose 1.7% to US$87.63 a barrel. Oil prices rose on Chinese demand optimism.

Tech shares on watch

It could be a great session for tech shares such as Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO) on Monday after their US peers stormed higher on the Nasdaq Friday. Jeff Kilburg, the founder and CEO of KKM Financial, told CNBC: "You're seeing more weight go into some of the beat-up technology and because people are becoming a little bit more thoughtful of opportunity in the absolute tech wreck we saw in 2022."

South32 quarterly

The South32 Ltd (ASX: S32) share price will be on watch today when the mining giant releases its quarterly update. According to a note out of Goldman Sachs, its analysts expects South32 to report copper production of 17kt, met coal production of 1,450kt, alumina production of 1,402kt, and nickel production of 11kt.

Gold price edges lower

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price edged lower on Friday. According to CNBC, the spot gold price fell 0.15% to $1,925.33 per ounce after the US dollar firmed. However, this couldn't stop the precious metal from recording its fifth successive weekly gain.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.