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3 tech shares I’m tipping for market-thumping returns in 2017

It’s fair to say that 2016 has been a reasonably disappointing year for Australian tech shares. The S&P/ASX 200 Info Tech (Index: ^AXIJ) (ASX: XIJ) index is down 1% this year, compared to a 6% gain from the S&P/ASX 200.

But I’m tipping it to bounce back strongly in 2017 thanks to a growing number of listed tech companies displaying enormous growth potential. Here are three which I expect to outperform the market in 2017:

Altium Limited (ASX: ALU)

Thanks to the incredible growth of connected devices, I expect Altium’s printed circuit board design software will continue to grow in popularity next year. In FY 2016, Altium saw an 11% increase in subscriptions helping the company produce revenue growth of 17% to US$93.4 million. Impressively management is confident that the company is on course to more than double revenue to US$200 million by 2020. At 24x estimated FY 2017’s earnings, I believe its shares are good value for patient investors.

iSentia Group Ltd (ASX: ISD)

This media monitoring company has been a big disappointment this year due to the underperformance in its much-hyped content marketing business. After a bright start the segment has fallen apart due to some poor strategic decisions. As a result the segment is expected to report an EBITDA loss of around $2 million in the first half of the year. Management appears confident that it will turn its performance around in the second half. If it delivers on its promise then at 15x estimated forward earnings, iSentia could prove to be a bargain buy.

Webjet Limited (ASX: WEB)

This online travel agent looks set to have a sensational year ahead. So far in FY 2017 trading has been strong. A recent update revealed that its bookings growth in the consumer market continues to outperform the market by more than four times. Business-to-business bookings growth is growing even quicker at an amazing 10 times the market average. In light of this management expects EBITDA from its continuing businesses to come in at $60 million. This is significantly higher than the $37 million it delivered last year. I think at 25x estimated FY 2017’s earnings its shares are great value for buy and hold investors.

One final thing that I like about Webjet is that it pays a reasonable but fast-growing dividend. Sure it doesn't provide a huge yield like this hot dividend stock, but in time it could become a key dividend payer if you get in early enough.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Altium. 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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