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September WAAAX roundup: Should you invest?

It’s that time of month again. Here’s the September wrap up of our beloved tech stocks on the ASX, otherwise known as WAAAX. For the uninitiated, ‘WAAAX’ is the Australian version of the US FAANG stocks and is comprised of our leading tech companies.

Key forces impacting the valuations of the WAAAX over the last month include company earnings and global uncertainty in trade markets.

WiseTech

This logistics company never fails to impress. WiseTech Global Ltd (ASX: WTC) has returned a stellar 107% to its investors in the year-to-date. It sports one of the highest price-to-earning (P/E) ratios in the world, hitting 196x with yesterday’s $35.17 close. Since announcing its FY19 results last month, its share price popped more than 10% alone.

WiseTech’s clever business model allows it to grow with its clients. This has been key to its 33% increase in net profit after tax (NPAT).

Appen

Appen Limited (ASX: APX) is in the red. Over the last two weeks, the company’s share price has plunged 17% lower, closing at $21.57 yesterday, but has rallied in morning trade to be up 3.15% at the time of writing.

Appen’s recent share price fall is most likely due to its price cooling amidst sky-high valuations. Appen’s share price grew 142% from the new year to its peak in July of $31.42. Despite shedding off almost 20% of its market capitalisation, Appen’s HY results were quite promising. Revenue and profit growth numbers hit 60% and 33%, respectively.  

While this may seem to be an attractive buy, Appen still operates on a high 53x P/E ratio, making it expensive nevertheless.

Altium

Altium Limited (ASX: ALU) has fallen 11% in the last week, closing at $33.92 yesterday, but has bounced back somewhat this morning and is currently up 3.51% in early trade.

Like Appen, it reported strong earnings, posting a 23% increase in FY revenue to US$171.8 million. NPAT was also up, rising 41% to US$52.9 million. However, amidst global trade uncertainties tech prices are cooling, especially for companies like Altium with an 86x P/E ratio.

Nevertheless, management is confident that the company can hit its goal to grow revenue to US$500 million by 2025 and secure its position as the market leader for printed-circuit board design.

Afterpay

This treasured fintech has charged 35% higher since announcing its FY19 results 3 weeks ago. Afterpay Touch Group Ltd (ASX: APT) is currently trading for $32.77, easily surpassing the revered $30 mark.

Afterpay has now successfully launched in the UK, and it’s acquiring a whopping 7,900 customers daily across this new market and the US. There has been nothing but good news for this fintech.

Xero

The Xero Limited (ASX: XRO) share price has softened around 5% to $63.78 in the last two weeks. This is largely due to investor disappointment with the slow progress of Xero in capturing the US market.

The growth potential for cloud accounting software in North America is huge, reaching only 10% market penetration in countries like Canada. This pales in comparison to Australasia – where 50% of businesses use online accounting solutions.

Xero recently appointed new country managers for the US and Canada. Investors will be watching closely if this will succeed in bolstering key partner channels in the regions.

If you're interested in exploring further growth opportunities and aren't too sold on the WAAAX stocks, perhaps you should take a look at these recommendations by Motely Fool experts.

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