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October WAAAX update: Should you invest?

The ASX has had a shaky first week in October. Markets stooped lower as the US faces yet another obstacle in the trade war. With the World Trade Organisation clearing $11.2 billion worth of tariffs imposed on the European Union, low investor confidence has dragged the index down.

As tech companies pose high betas, share prices have been amplified within the tech industry. Here’s how the WAAAX have performed this last month.

WiseTech

The WiseTech Global Ltd (ASX: WTC) share price has cooled over the last month, dropping more than 11% to $34.02 at time of writing. Nevertheless, the company is still up a whopping 102.85% year to date, bumping its price-to-earnings (P/E) ratio to 197x.

It’s no secret the logistics company has been on a steady growth trajectory, with its FY19 results sharing nothing but good news. Net profit after tax (NPAT) expanded by 36%, fuelled by a sticky product with 1% customer churn and several strategic acquisitions.

WiseTech grew its market capitalisation by around 4% last week in line with an improving Nasdaq index.

Appen

The Appen Limited (ASX: APX) share price has been pummelled more than 18% lower to $21.13 over the last month.

Despite quite positive HY results, Appen’s share price has been in the red over the last two months. This is likely due to cooling prices within the tech community, particularly with uncertainties in the US market.

Given this is a 20% discount on its July prices (which skimmed past $30), this could be a bargain investment. Appen provides quality data sets to train AI and machine learning applications via a remote labour force model. Its data solutions capitalise on the future of work and will be critical in the years to come. 

Altium

The Altium Limited (ASX: ALU) share price is down 16%, trading for at $31.84 at the time of writing.

This is an unfortunate performance update that has come despite Altium reporting positive earnings with NPAT up 41%. The company also boasts a debt-free balance sheet, with its profit margin hitting almost 40%.  

Like Appen, this discounted price may be an attractive buy opportunity given its strong performance and fundamentals. Altium aims to be the market leader in 2020, and you’ll be wanting in if/when this comes to fruition.

Afterpay

Unlike its WAAAX counterparts, Afterpay Touch Group Ltd (ASX: APT) is a modest 2% higher over the last month.

Since its FY results, Afterpay’s share price has skyrocketed. Its market capitalisation has risen 44% higher since late August, a testimony to its international success thus far. Its UK business, Clearpay, has acquired 200,000 customers in its first 15 weeks. This growth exceeds that of the US.

Hold tight, analysts are plastering a potential $40 price tag on this one for 2020.

Xero

In the last month, the Xero Ltd (ASX: XRO) share price has softened 6% to $63.31.

The company has had a solid year, reporting a 36% growth in revenue and 52% in its earnings. Xero is clearly an investor favourite. On top of its high-growth rate supported by a lucrative subscription business model, the cloud accounting software it provides is a world-class product.

Xero grew its total net subscribers by 400,000 this year, with over half being users outside of Australia. This should be one to watch for the tail-end of 2019.

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

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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