As we gather around the dining table on Christmas Day, there will be no shortage of debate about the rapid fall and rise of markets in 2020.
Everyone has an opinion. Grandpa’s preaching Bitcoin is going to the moon, Mum thinks Afterpay is a millennial fad, and then there’s the crazy Uncle nudging you about the next big penny-stock.
Christmas can be a minefield of its own, however, these 3 ASX Share Ideas for Christmas Day will help you steer through the festivities.
1. Altium Limited (ASX: ALU)
One for the engineers of the family, Altium is a leading provider of Printed Circuit Board (PCB) design software. Virtually every electronic product utilises PCB’s, from your mobile phone to desktop computer. The company recently reported 10% annual revenue growth and an increase in EBITDA of 13%, demonstrating growing operating leverage as the business continues to scale.
What makes me most excited about Altium is the release of Altium 365, a cloud-based platform that integrates designers with professionals from manufacturing and supply chain. This streamlines the production process for designers and creates an online meeting point for like-minded engineers and manufacturers to produce electronic hardware in real-time. If successful, Altium will move from being a software provider to a platform that vertically integrates the PCB supply chain.
Management is strongly aligned with shareholders, with the CEO holding 7.38% of the outstanding shares, in addition to the CTO and Chairman each holding over 1% of the issued capital. Moreover, Altium’s ambitious long-term goal of 100,000 subscribers and US$500 million in revenue by 2025, further highlights its goal of creating long-term shareholder wealth.
2. Magellan Financial Group Limited (ASX: MFG)
Most will be familiar with Magellan’s Global Equity and Infrastructure Funds; however, investors also have the option of owning the fund manager. Magellan clips the ticket on Funds Under Management (FUM) by charging annual management and performance fees. As FUM grows, revenues increase and drop to the bottom line. This is best demonstrated by its 57% net profit margin.
The company is bringing new product offerings to the market. Magellan recently launched the MFG Core Series, which offers three new funds with a low-cost annual management fee of 0.50%. The three funds are:
- MFG Core International Fund (CXA: MCSG)
- MFG Core ESG Fund (CXA: MCSE)
- MFG Core Infrastructure Fund (CXA: MCSI)
Furthermore, Magellan has a retirement product in the pipeline in addition to recruitment for a developing markets team. These new offerings will grow FUM and thus drive future growth.
Similar to Altium, Magellan has strong shareholder alignment. Founders Hamish Douglass and Chris Mackay hold 12.19% and 9.55% respectively of the issued capital. With multiple avenues for growth in FUM, Magellan looks to be an attractive long-term investment.
3. a2 Milk Company Ltd (ASX: A2M)
It’s been a turbulent 2020 for a2 Milk Company shareholders, reaching a share price high of $20.05 in July before falling to today’s price of $10.99 resulting from downgraded FY21 guidance.
a2 Milk’s China business has suffered in the second half of this year, largely due to supply chain issues relating to its daigou channel. With international travel limited, retail and corporate daigous have been unable to send a2 Milk products overseas, therefore restricting supply and impacting sales.
If you believe international travel will rebound in 2021, today is a great entry price for a business with a large addressable market and strong brand. However, it is worth considering the risks, including a shift in consumer behavior towards local brands in China and the over significant reliance on China to fuel growth.
