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3 tech stars I would buy after the market selloff

Yesterday’s tech selloff means that the S&P/ASX 200 Info Tech index has now given back almost all its year to date gains.

Which is especially disappointing given that in August the tech index was vastly outperforming the market average with a year to date gain of over approximately 25%.

While it is unclear whether the tech index has bottomed yet, I do believe that significant value is emerging in many popular tech shares.

Three that I would consider buying with a long-term view are listed below:

Altium Limited (ASX: ALU)

This electronic design software company’s shares have fallen 30% from their 52-week high of $30.51, which means they change hands at approximately 41x estimated forward earnings. While this is by no means cheap and leaves its shares vulnerable to further declines if the tech selloff resumes, I believe its strong long-term growth potential justifies the premium. After all, Altium looks set to be a big winner from the rapidly expanding Internet of Things market.

Appen Ltd (ASX: APX)

Appen is my favourite in the WAAAX group of shares right now. A note out of Citi last week reveals that its analysts have forecast earnings per share of 36 cents in FY 2018 and 49.3 cents in FY 2019. This means Appen’s shares are currently priced at just 25x estimated FY 2019 earnings. I think this is very reasonable given the company’s leading position in the fast-growing artificial intelligence and machine learning markets.

Aristocrat Leisure Limited (ASX: ALL)

Another tech share which I think is trading at a very attractive price is Aristocrat Leisure. Despite the solid long-term growth potential the company has from its strong core business and fast-growing digital segment, Aristocrat Leisure’s shares are changing hands at just 17x estimated FY 2019 earnings. I think this makes it one the best growth shares on offer on the Australian share market right now.

Looking for more tech shares to buy? These tech shares could be great options 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 Altium and Appen Ltd. 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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