Altium Limited (ASX: ALU) is one of Australia's largest software businesses with a market capitalisation of $1.1 billion.
The share price has grown an incredible 2,500% over the last five years but there are signs that it is nowhere near done yet. Here are a few reasons why Altium could be the best growth stock on the ASX to own:
Rapidly growing industry
Altium provides electronic PCB software for engineers to design the products of the future. Everyday objects are becoming more complicated and connected such as cars, fridges, phones and computers.
To make these products work we need increasingly advanced software, which is where Altium comes in.
Altium has an impressive array of clients including Microsoft, BMW, Toyota, NASA, Cochlear Limited (ASX: COH) and Lenovo.
Revenue and profit margins
Hopefully all of this increase of Altium's services translates into a big jump in revenue. Management are predicting that revenue could double by 2020 and keep increasing from there.
The most satisfying companies to own are ones that increase their profit margins as they increase revenue. This makes them more profitable as time goes on, resulting in profits growing quicker than revenues.
In its latest results to 31 December 2016 management reported that the earnings before interest, tax, depreciation and amortisation margin increased from 25% to 25.8%.
Great dividend too
I like any growth stock that rewards shareholders along the way with a growing dividend. Altium has grown its dividend every year since 2012 and in its latest results increased the dividend by 10%.
In fact, the dividend has grown has grown really strongly in this time. In 2012 the half-year payment was $0.05 per share and the latest payment was $0.11. Doubling the dividend in five years is a fantastic result for shareholders who are also looking for income.
Foolish takeaway
Altium is currently trading at 23x FY18's estimated earnings with an unfranked dividend yield of 2.51%. A patient investor could be rewarded by investing in Altium shares today and holding for the long-term.
