When looking for buy and hold options, I think the information technology sector is a great place to start.
This is because I believe there are a number of tech shares that have significant growth runways that could lead to them delivering outsized returns over the next decade at least.
Three top tech shares that I would consider as buy and hold options are listed below:
LiveTiles Ltd (ASX: LVT)
If you’re a fan of small cap shares then I think this digital workplace platform provider could be worth considering. Thanks to strong demand from a wide range of big names customers such as Hungry Jacks, Pepsico, and the Victorian Government, LiveTiles has been growing its annualised recurring revenue (ARR) at an incredible rate over the last couple of years. This strong growth has continued in FY 2019 with the company tripling its ARR year-to-date to $34.5 million at the end of the third quarter. Management appears confident that this can continue and is targeting an ARR of $100 million by the end of June in 2021.
NEXTDC Ltd (ASX: NXT)
NEXTDC is one of Australia’s biggest data centre operators with a world-class network of centres in strategic locations across the country. Despite investing heavily in its future growth, NEXTDC delivered a 26% increase in EBITDA to $42.2 million in the first half of FY 2019. This was the result of a 28% increase in contracted utilisation and a 34% lift in interconnections. Pleasingly, with the cloud computing boom showing no signs of slowing, I believe demand for its services will continue to grow for the next decade and drive strong profit growth.
Xero Limited (ASX: XRO)
Another quality buy and hold option in the tech sector could be this cloud-based business and accounting software provider. Xero has achieved impressive growth over the last few years thanks to the quality of its product and increasing demand for its software due to the shift to online accounting. The good news is that Xero still has a significant global market opportunity, which I believe has positioned it to continue its strong form for many years to come.
Where to invest $1,000 right now
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*Returns as of February 15th 2021
Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of Xero. 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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