I think the Australian information technology sector is a great place to look for buy and hold investments.
This is because there are a good number of companies that I believe have the potential to grow materially over the next decade.
Three which I feel could generate outsized returns for investors over the long term are listed below. Here's why I would buy them:
Altium Limited (ASX: ALU)
Altium is an award-winning printed circuit board (PCB) design software provider which I believe has a long runway for growth thanks to its exposure to the fast-growing Internet of Things (IoT) market. As PCBs are found in almost all IoT devices, I expect demand for its software to continue increasing at a strong rate for a long time to come.
Appen Ltd (ASX: APX)
Appen is the global leader in the development of high-quality, human-annotated training data for machine learning and artificial intelligence with a 1 million+ team of crowd-sourced workers. Its crowd-sourced team allows the company to collect and label high volumes of image, text, speech, audio, and video data used to build and improve artificial intelligence systems. Given the growing importance of artificial intelligence and machine learning and Appen's leadership position, I feel Appen is well-placed to continue growing its earnings at a strong rate long into the future.
Xero Limited (ASX: XRO)
Xero is a provider of cloud-based business and accounting software which has been growing at an explosive rate over the last couple of years thanks to increasing subscriber numbers and strong recurring revenue growth. Given its massive global market opportunity, high quality product, stickiness, and pricing power, I believe it is in a strong position to continue this trend for a long time to come.
