3 hot technology stocks for your portfolio

The share market is divided into a number of industries. There are industries such as retail, finance, minerals and technology.

Technology is one of the most exciting industries because of how quickly and cheaply growth can be achieved. Most technology businesses just have to develop their service and then electronically distribute it. It’s not like they have to build and a transport a new chair for every extra chair they went to sell.

If you can buy technology businesses at a reasonable price then they could make good long-term investments. Here are three of my favourite technology businesses on the ASX:

Gentrack Group Ltd (ASX: GTK)

Gentrack is a company that provides technology for airports and utility companies. It offers billing and other add-on services.

Utility companies and airports themselves are known for having a defensive set of earnings, so it makes sense to service these businesses. Gentrack has been steadily making small acquisitions to bolster its services and be able to offer a whole suite of services to clients.

Gentrack is trading at 34x FY16’s estimated earnings with an unfranked dividend yield of 2.53%.


Xero is the cloud accounting package that’s taking the western world by storm. It has grown far beyond a small New Zealand bookkeeping business, it now has over a million subscribers across Australia, New Zealand, the UK and the USA.

Its recurring revenue and growth rates make a powerful combination that should make most investors excited.

Xero isn’t yet making a net profit after tax or paying a dividend.


Some of the best technology companies in the world are based overseas. Apple, Alphabet (Google), Amazon and Microsoft are all based in the USA.

However, Aussie investors can still buy a slice of the USA technology pie through this exchange-traded fund which mirrors the hundred biggest businesses on the NASDAQ.

The NASDAQ can be quite volatile so investors should invest for the long-term for the best chance of outperformance.

Foolish takeaway

I think technology and healthcare are the best two industries overall.

The above three options should all go on to achieve market-beating results from here. At the current prices, I’m most confident about the NASDAQ index going on to generate the highest returns over the next decade. Its constituents are still growing revenue after a decade of impressive results.

The problem with technology stocks is that they're all highly valued with low dividend yields. If you want to find impressive growth stocks with dividends then you should read about these shares.

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Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. 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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