The All Ordinaries has been on a great run in recent months thanks to the strength of the global share market, the surprise Liberal election win and interest rate cuts by the RBA.
However, those names are so expensive these days that we probably need to look elsewhere.
With how investors have sent the Nearmap Ltd (ASX: NEA) share price and the Technology One Limited (ASX: TNE) share price up to the moon over the past year, I think it’s quite possible that some of the lesser-liked tech shares could see a resurgence, particularly if un-liked shares come good.
Here are two ideas:
Class Ltd (ASX: CL1)
Many investors seemed to have written Class off with competition rising in the accounting space and the SMSF industry suffering.
However, the cloud accounting software business continues to grow its number of SMSF and Class Portfolio accounts, which it has a high retention rate and very attractive recurring revenue with.
Class is also exploring other revenue avenues with an agreement with wealth accounting group Findex and an investment into Philo Capital Advisers.
It’s trading at 20x FY18’s earnings with a grossed-up dividend yield of 4.8%.
MNF Group Ltd (ASX: MNF)
MNF has disappointed recently by not hitting its previous earnings guidance. However, the multi-brand voice communications and software business is enjoying the benefits of industry growth and the strength of its software and platform.
The company is investing and expanding, so the short-term results aren’t too pleasing, but MNF is predicting earnings per share (EPS) growth between FY18 and FY20 of at least 25%. If it achieves the FY20 EPS of at least 20.4 cents it’s trading at 18x FY20’s estimated earnings. MNF is also looking to grow in Singapore which could be an added bonus.
Turnarounds don’t always happen, but it’s quite possible Class and MNF could do well from here as they both look at add revenue streams. At the current prices I’m drawn more to MNF because of its FY20 guidance. However, they are both higher-risk than some of the investments I normally mention.
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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of and has recommended MNF Group Limited and Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, Appen Ltd, and Class 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.