Technology stocks are some of the most exciting opportunities on the ASX. Once profitable they can keep selling more services, which adds most of the new revenue to the bottom line.
Here are three shares that are likely to ramp up their revenue and profit over the next few years:
Altium Limited (ASX: ALU)
Altium has seen its share price decline from $9.31 in June to $8.36 today, partly due to the strengthening Australian dollar.
The electronic PCB software company is expecting strong revenue growth over the next few years as the 'Internet of Things' trend hots up.
Altium is currently trading at 23x FY18's estimated earnings with an unfranked dividend yield of 2.51%.
Xero FPO NZX (ASX: XRO)
Xero is the Kiwi cloud accounting package that's taking the English-speaking world by storm. It has dominated the New Zealand market and will soon be the clear leader in Australia.
The exciting next stage of growth is in the UK. With a population almost three times as big as Australia it's easy to see why Xero management are focusing there.
The pleasing thing about Xero's subscribers is that they have a much higher survival rate than the average business. This suggests that Xero subscribers are more forward thinking and using the best tools they can to help their business.
Xero isn't yet making a profit or paying a dividend.
This is another Kiwi business, it develops billing & software solutions for utility companies and airports. Gentrack provides services for defensive companies so its revenue is defensive as long as it can keep its contracts.
I like Gentrack's strategy of acquiring businesses that complement its current offering to clients, allowing it to fully utilise its customer base.
Gentrack is currently trading at 36x FY16's earnings with an unfranked dividend yield of 2.43%.
Foolish takeaway
All three of these businesses have exciting futures but I think Altium is my clear winner at the current price. The business is predicting strong growth, increasing margins and a growing dividend, hopefully it's a pretty big market-beater from here.
