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.
Or, you could enjoy all the comforts of home with the following 3 companies, which are a long-term buying opportunity in my opinion:
For many, blue chip stocks means stability, profitability and regular dividends, often full franked..
But knowing which blue chips to buy, and when, can often be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2017."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
If you’re expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you’ll be sorely disappointed. Not only are their dividends growing at a snail’s pace, their profits are under pressure too due to the increasing competitive environment.
The contrast to these “new breed” blue chips couldn’t be greater… especially the very real prospect of significant share price gains, something that’s looking less likely from the usual blue chip suspects.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
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.