Although I think that Afterpay Touch Group Ltd (ASX: APT) and WiseTech Global Ltd (ASX: WTC) could prove to be very rewarding long-term investments, due to their sky-high valuations I can completely understand why some investors may not be comfortable buying their shares.
The good news is that not all tech shares trade on nosebleed multiples.
Three top tech shares that I believe trade on reasonable valuations given their strong growth prospects are listed below. Here's why I like them:
Appen Ltd (ASX: APX)
Appen is a leading provider of data used for the development of machine learning and artificial intelligence products. These markets are expected to grow at an explosive rate over the next decade, putting Appen in a strong position to profit greatly. And while its shares have been on fire over the last 12 months, I believe they still trade at a reasonable level. Based on a note out of Citi at the end of August, Appen's shares are changing hands at just 24x estimated FY 2019 earnings.
Bravura Solutions Ltd (ASX: BVS)
Bravura is a provider of software solutions for the wealth management, life insurance, and funds administration industries. Strong demand for its Sonata wealth management product led to the company reporting a 27% increase in underlying net profit after tax to $27 million in FY 2018. According to a note out of Macquarie at the end of August, it expects earnings per share growth of 17% this year to 14.7 cents. Based on this estimate, its shares are priced at 30x forward earnings.
Citadel Group Ltd (ASX: CGL).
Citadel is a leading software and services company that specialises in information management. Its key product is its Citadel-IX cloud-based enterprise information management platform which allows users to securely access and transfer proprietary and sensitive information remotely. Based on its strong FY 2018 results, Citadel's shares are trading at 27x earnings at present. I think this is great value given its solid long-term growth prospects.
