One of my favourite tech shares on the ASX would have to be printed circuit board software provider Altium Limited (ASX: ALU).
Thanks to the explosive growth of the connected device market, better known as the Internet of Things, I believe Altium is in a position to provide investors with market-beating returns over the next decade.
Despite the fact its share price has rallied an astonishing 76% in the last 12 months, investors can still snap up its shares for a little under 25x estimated FY 2017's earnings. I believe this is a great entry price for long-term buy and hold investors.
Especially with management confident of delivering high levels of sales growth between now and 2020.
In FY 2016 the software-as-a-service company reported a 16.7% jump in sales to US$93.6 million. Impressively by FY 2020 management is confident of gaining market leadership and producing annual sales of US$200 million.
This equates to sales growth of approximately 21% per annum for the next four years. If it delivers on its promise then 25x earnings would prove to be an absolute bargain in my opinion. But what are the chances of it achieving this guidance?
According to information technology research firm Gartner, there were 6.4 billion connected devices in use worldwide by the end of last year. The firm expects this to rise to a staggering 20.8 billion devices by 2020.
With Altium playing a key role in the industry by providing the software that enables companies to design the printed circuit boards used in connected devices, it clearly is positioned perfectly to capitalise on this growth.
Especially with its partnership with software giant Dassault Systemes expected to boost top line growth from next year onwards. Altium's software was included in the latest version of its popular SolidWorks computer aided design product.
All in all, I believe Altium is a must buy right now and would go so far as to recommend it ahead of other quality tech shares such as Aconex Ltd (ASX: ACX) and WiseTech Global Ltd (ASX: WTC).
