Watchlists are a great investing tool to have. Keeping a list of ASX shares you are interested in, but don't own, helps you to stay updated when they release announcements. This means over time you can get a feel for how the companies are performing, being managed and their growth prospects. Of course you should already be doing this for companies you own.
Below are 2 ASX shares I'm watching closely during this bear market. One from my portfolio, and one from my watchlist.
Altium Limited (ASX: ALU)
From my watchlist is the printed circuit board (PCB) designer Altium. I have been impressed with Altium's growth in subscriptions and ability to steal market share from its competitors, with the company growing its share of the PCB market from around 16% in 2014 to roughly 25% today.
Altium's recent fall has surpassed that of the general market, as many high valuation growth stocks experience greater volatility. Altium has seen its share price fall from a high of $42.72 on 17 February to its current price of $24.56 at the time of writing, down a further 5.06% in today's trade.
While the S&P/ASX 200 Index (ASX: XJO) and broader market continue to be sold off in the short term, the long-term earnings potential of Altium remains unabridged. In fact, it sits high on my watchlist thanks to its capital light, software-as-a-service (SaaS) business model. Additionally, Altium carries no debt and has a strong cash position on its balance sheet at just over $80 million. This strong balance sheet and current profitability should help it through any tough times ahead if it were to experience subscription losses from struggling small businesses.
Altium's recent results showed an increase in revenue, subscriptions and growth in its margins. Management also increased its interim dividend by 25%. I will continue to watch this one closely over the coming weeks.
Rural Funds Group (ASX: RFF)
One company I already own and will be looking to add to is the agricultural REIT Rural Funds Group.
One reason I find it compelling to buy Rural Funds during this market volatility is its solid assets, for which it has high quality lessees such as Treasury Wine Estates Ltd (ASX: TWE) and JBS Australia. With the ASX downturn showing no discretion, Rural Funds has seen its shares sold off along with the broader market. However, thanks to its long 11.5 year weighted average lease expiry (WALE), I think its ability to continue increasing and paying its dividend should remain intact, as should its longer-term growth prospects.
Rural Funds' last reported net asset value (NAV) was $1.84 and its share price is trading under $1.70 today, so I think it offers great medium and long-term potential.
