WiseTech Global has increased its guidance for revenue growth to between 44% and 50% and EBITDA growth to between 31% and 37%. This equates to a guidance range of $320 million to $333 million for revenue and $102 million to $107 million for EBITDA.
The company’s previous guidance had been for revenue growth of 42% to 47% and EBITDA growth of 28% to 35%.
While this certainly is impressive growth and I believe the company has enormous potential, I’m still not a buyer of its shares right now due to its nosebleed valuation.
WiseTech Global’s shares are currently changing hands at 82x estimated forward earnings, which I feel makes them high risk considering the way investors have been selling down high PE stocks.
So, until WiseTech Global’s shares are trading on what I would consider to be a more reasonable valuation, I’m going to sit this one out and focus on tech shares trading on fairer multiples.
Two tech shares that fit the bill for me right now are as follows:
Aristocrat Leisure Limited (ASX: ALL)
Aristocrat Leisure’s shares have been caught up in the tech selloff this month, leading to them losing over 7% of their value since the start of October. Given the fact that its shares were already trading on a reasonable valuation, I think this selloff was unnecessary and has created a buying opportunity for investors. Especially considering the strong long-term growth potential of its digital business and the fact that its shares are changing hands at just 20x estimated FY 2019 earnings.
Appen Ltd (ASX: APX)
Appen is a global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence. Its shares have fallen hard in recent days and are down 26% since the start of the month. This means that Appen’s shares are now changing hands at 31x estimated FY 2018 earnings and 26x estimated FY 2019 earnings. I think this makes it great value for growth investors.
As well as Appen and Aristocrat Leisure, I think these blue chip growth shares are in the buy zone right now.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd and WiseTech Global. 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.