5 blistering ASX tech shares for 2016

Credit: Jason Howie

As I wrote this morning, Apple, Microsoft and Google, combined, are worth 30% more than all 2,221 companies listed on the ASX.

There are many characteristics that make them outstanding success stories, but some of my favourites are the scalability and ubiquitous nature of their technology. Scalability enables companies to bolt on more profit for minimal extra cost, while their ubiquitous nature means their products can be used by billions of people, irrespective of country borders or cultural beliefs.

Over the past two decades, Australia has been unable to foster a culture of technological innovation like the USA, parts of Europe or Asia. However, we continue to make inroads to becoming a more innovative country.

For example, the following five companies have already proved their worth in local markets and are tackling the global marketplace head on.

  1. Carsales.Com Ltd (ASX: CAR). The most dominant automotive listings business, Carsales, has grown into a $2.8 billion company with global ambitions. Along with its stake in iCar Asia Ltd (ASX: ICQ), Carsales is investing heavily to grow its business for the long term.
  2. SEEK Limited (ASX: SEK). Like Carsales, Seek has a tested business model. The company has operations throughout Asia, including China and Brazil.
  3. REA Group Limited (ASX: REA). The ASX’s largest online listings business is REA Group, the owner of and more. The $7 billion real estate heavyweight also has operations in the USA, Italy, Luxemburg and France.
  4. XERO FPO NZ (ASX: XRO). XERO is a cloud computing accounting software business out of New Zealand. Xero has already disrupted Australian and New Zealand markets and is rapidly growing in the UK. It also has its eyes on the USA.
  5. Nearmap Ltd (ASX: NEA). Nearmap is a small-cap aerial imagery business that is also tackling the lucrative US market. Nearmap’s high-resolution images are being used in a range of applications, such as insurance, solar panel quotations and construction.

Foolish takeaway

The Australian sharemarket may not have any behemoths like Apple, but it does have many proven technology companies that could be ready to take the next step in their development. While, small-caps like Nearmap provide higher-risk alternatives for investors seeking significant raw upside potential.

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Motley Fool writer/analyst Owen Raszkiewicz owns shares of Seek, Nearmap and Xero, and has a financial interest in Carsales. 

Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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