The Motley Fool

Broker picks top 3 ASX tech stocks for FY20

Technology is on track to become the second-best performing sector on the market in FY19 as it rallied around 20% over the past year when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index gained a more modest 7%.

The strong showing is driven by the likes of the Afterpay Touch Group Ltd (ASX: APT) share price and WiseTech Global Ltd (ASX: WTC) share price which are up 170% and 75%, respectively.

Some believe many in the sector now fully or over-priced, but Bell Potter believes there are still gems to be found for those willing to do a little digging.

Re-rating candidate

To help you along, the broker has nominated the top three tech stocks to buy ahead of the August reporting season – and these are stocks that haven’t been getting much attention from the market.

The first is Integrated Research Limited (ASX: IRI), which is Bell Potter’s top pick following the software developer’s record first half result in February and a strong quarterly trading update.

Despite this, the stock has only managed to record a gain of less than 2% over the past year but Bell Potter believes the stock will re-rate further at its full year results.

Bell Potter has a “buy” recommendation on the stock with a price target of $3.50 a share.

Buy the dip

The second stock on the list is Technology One Limited (ASX: TNE) after its share price took a beating last month on a poorly received half year result (its financial year end is September).

But the broker thinks the sell-off is overdone and describes the results as only being “slightly disappointing”.

“But we are confident in a strong 2HFY19 result and, like last year, expect the stock to rally in the lead up to and following the full year result,” said Bell Potter.

The broker has a “buy” recommendation on the stock with a $9 a share price target.

Sporting hero

Finally, Catapult Group International Ltd (ASX: CAT) is a new pick for the broker. Bell Potter believes there are a number of positive share price catalysts for the sports technology group.

The broker also believes Catapult will achieve its FY19 guidance, bring forward the positive free cash target by 6-12 months, appoint a new CEO and set FY20 guidance that shows strong growth in earnings before interest, tax, depreciation and amortisation (EBITDA).

Bell Potter has a “buy” rating on the stock with a $1.50 a share target price.

If you are hunting for other overachievers in FY20, the experts at the Motley Fool have a few more suggestions to put on your watchlist.

Follow the free link below to find out more.

These ASX shares have shot up 204% and even 954%, but we think they’re just getting started

The $700 billion “war on cash” is on… and even The New York Times is calling it “a goldmine of staggering proportions”…

That’s why The Motley Fool has just released a brand-new research report: “Leave Your Wallet at Home: 2 Stocks for the Digital Payments Revolution.” Inside, you’ll find 2 expert-picked ASX shares poised to profit from this sweeping tech revolution.

Heck, stock #1 is already up 204% in just the last two years. While Stock #2 has climbed an eye-watering 954% since 2015 alone…

Yet we’re convinced the sheer biggest returns could be still ahead, with 10X or more potential profits still on the table. Simply click the link below now and we’ll show you how to snap up this timely (and potentially highly profitable) new research for FREE.

Click here to snap up your copy of “Leave Your Wallet at Home: 2 Stocks for the Digital Payments Revolution.”

Brendon Lau owns shares of AFTERPAY T FPO. Connect with him on Twitter @brenlau.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Catapult Group International Ltd, Integrated Research Limited, and WiseTech Global. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Catapult Group International 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.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.