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WiseTech share price edges higher on acquisition news

The WiseTech Global Ltd (ASX: WTC) share price has been a standout performer in 2019, surging nearly 60% higher alongside its “WAAAX” peers.

Despite a difficult August so far, the WiseTech share price has edged higher after the Aussie logistics group announced a new acquisition this morning.

What did WiseTech announce this morning?

WiseTech announced the acquisition of a US-based container yard and terminal management logistic solution company for $4.4 million upfront.

Depot Systems is a leading provider of container yard management, maintenance and repair estimating, with WiseTech paying $4.4 million with a further multi-year earn-out potential of $2.7 million.

While this may seem like small change for a company that boasts an $8.52 billion market cap, CEO Richard White said the acquisition is a “valuable addition to build further opportunities” for the company’s technology solutions.

Given Depot System currently has annual revenue of just $1.3 million, WiseTech said it does not expect it to be of material value to the company’s earnings despite its strategic significance.

The transaction is the latest for WiseTech following a spending spree that has seen it increase its footprint across Australasia, Europe and South America.

How has the WiseTech share price performed in 2019?

The WiseTech share price has been a top performer on the S&P/ASX 200 (INDEXASX: XJO) index so far this year, soaring 57% higher YTD.

However, growth has tapered in August with the WiseTech share price falling 17% lower alongside its fellow WAAAX stocks in Appen Ltd (ASX: APX), Afterpay Touch Group Ltd (ASX: APT), Altium Ltd (ASX: ALU) and Xero Ltd (ASX: XRO).

The biggest tech stocks on the ASX, alongside the Resources sector, have been hammered this month as the US–China trade war tensions have heated up and caused concerns for short- to medium-term growth.

The Aussie logistics solutions group is expected to report its full-year results for FY19 on Wednesday, with Altium scheduled to report its earnings this afternoon.

All eyes are sure to be on the WAAAX stocks as a barometer for this August reporting season, and I’d expect any signs of slowing growth to be punished by investors heading for the exit.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of WiseTech Global and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, and Appen 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.

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