Technology companies can be an attractive way to grow your wealth over the long term. Typically, these businesses build a competitive advantage, or ‘moat’, that gives them some form of advantage over the competition. This allows for attractive profit margins to be generated and maintained over the long term.
Here are 3 technology investments I think worthy of adding to your watchlist today:
Nearmap Ltd (ASX: NEA)
Nearmap is an aerial mapping company that has been plagued by a poor track record of market disclosure and, it is rumoured, a terrible (but improving) corporate culture. Those are significant concerns. However, on the other hand, the business has sustainably high gross margins, is very well funded with no debt, and saves a lot of time and costs for its customers.
While currently unprofitable due to the costs of expanding in the USA, continued growth and improving governance could see Nearmap become a nice earner for shareholders over time, and I have previously bought shares at today’s prices.
Orion Health Group Ltd (ASX: OHE)
Orion’s all-in-one health management software is improving communication between separate arms of the treatment process, digitising patient management and improving efficiency. The company is growing its customer base, although it announced yesterday that growth was slowing and that further fund raising may be required. I’ve written before that investing in unprofitable tech shares requires patience as the cash outflows typically lead to significant declines in the value of shares – this makes it important not to overpay.
Orion Management has reaffirmed their target of reaching break-even in 2018, although I would suggest checking their progress at the next report before considering a purchase.
BETANASDAQ ETF UNITS (ASX: NDQ)
The Betashares NASDAQ-100 Index owns the largest 100 non-financial companies on the US NASDAQ. Its top 10 holdings include Apple (12%), Microsoft (8%), Amazon (6.8%), Facebook (5.3%), and Alphabet (formerly Google; 4.6%). Dividends are low at ~0.5% per annum, and management fees are high-ish for an Exchange Traded Fund (ETF) at 0.48% per annum. However, it is an easy and straightforward way to gain exposure to the USA’s biggest technology companies without having to trade international shares.
One approach would be to build a position in this index over a period of years, aiming to ‘average out’ the chances of buying the market at what could be a high point.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Sean O'Neill owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of Nearmap Ltd. 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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