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3 market-beating tech shares to buy this month

Abstract digital and technology background.

The Australian tech sector certainly has been a great place to be invested over the last 12 months.

During this time the S&P/ASX 200 Info Tech (Index: ^AXIJ) (ASX: XIJ) has surged over 29% higher.

While there’s no guarantee it will continue its outperformance over the next 12 months, I think there are a few potential market-beaters in the sector worth taking a closer look at.

Three that I like are listed below:

ELMO Software Ltd (ASX: ELO)

ELMO is a leading provider of integrated cloud human resources and payroll software solutions. Its increasingly popular SaaS, cloud-based platform provides organisations with a centralised approach to managing an employee’s lifecycle from hire to retire. The company has been growing at an impressively strong rate this year and looks set to outperform its prospectus forecasts by some distance. Fortunately, with the ANZ market opportunity estimated to be worth upwards of US$770 million per year, it could potentially continue growing at a strong rate for some time to come.

NEXTDC Ltd (ASX: NXT)

According to Gartner, the cloud computing market is expected to grow to be worth US$411 billion in 2020 from an estimated US$305.8 billion in 2018. As the incredible rise of cloud computing continues, I expect demand for data centre services to rise strongly as well. This should put NEXTDC and its network of world class data centres in a great position to deliver bumper profit growth over the medium term. Though it is worth noting that its shares trade on a sky-high earnings multiple, making them a high risk investment option.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a medical technology company which specialises in breast imaging analytics and analysis software. Its software is regulatory cleared (FDA, CE, TGA), patent protected, clinically validated, used in 36 countries, and has over 273 supporting science publications. The key market at this stage, in my opinion, is the United States. It counts some of the largest and most respected cancer hospitals and screening sites in the country as customers, leading to it handling 3.2% of all breast cancer screening in the U.S. in FY 2018. Pleasingly, management is targeting a market share of 9% in FY 2019. I expect this to lead to another significant jump in annualised recurring revenues.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended ELMOSFTWRE FPO and VOLPARA FPO NZ. 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 Scott Phillips.

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