The Australian tech sector has been a great place to be invested in 2018.
Despite the recent market volatility, since the start of the year the S&P/ASX 200 Info Tech (Index: ^AXIJ) (ASX: XIJ) has posted a gain of 8% prior to today.
This compares to a decline of over 6% for the ASX 200.
While there’s no guarantee that 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:
Altium Limited (ASX: ALU)
Altium is an electronic design software company which I think has a very bright future ahead of it thanks to its exposure to the rapidly expanding Internet of Things (IoT) market. Because the majority of connected devices require printed circuit boards (PCB) inside them, I expect demand for the company’s award-winning PCB design software will continue to grow at a strong rate for the foreseeable future.
Appen Ltd (ASX: APX)
Appen is a global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence which counts some of the biggest tech companies in the world as customers. Because machine learning and artificial intelligence markets are expected to grow at a strong rate over the next decade, I expect demand for its services will grow in line with these markets and put it in a great position to continue its impressive growth. This year Appen expects to deliver an underlying EBITDA result in the range of $62 million to $65 million, which will be a 120% to 131% increase on FY 2017’s result.
REA Group Limited (ASX: REA)
Another top tech share that I would consider buying is this property listings company. Earlier this year there were concerns that a cooling housing market would stifle the company’s growth, but it has allayed these concerns by recently revealing an impressive start to FY 2019. In the first quarter of FY 2019 REA Group delivered a 17% increase in revenue to $221.9 million and a 23% lift in EBITDA to $130.9 million. This was driven by price changes which took effect from July 1, an improved product mix, and further depth penetration. I expect more of the same in the next few quarters.
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. The Motley Fool Australia has recommended REA Group Limited. 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.