Although the Nearmap Ltd (ASX: NEA) share price is trading around 40% lower than its 52-week high, it has still been a market-beater in 2019.
Since the start of the year the leading aerial imagery technology and location data company's shares have gained a sizeable 70%.
Why is the Nearmap share price up 70% in 2019?
Investors have been buying Nearmap's shares this year following the release of another strong performance in FY 2019 and a very positive start to the new financial year.
In FY 2019 Nearmap continued to experience strong demand for its services in both the ANZ and North American markets. This led to the company reporting record annualised contract value (ACV) of $90.2 million. This represents a 36% increase year on year.
Also getting investors excited was the more than doubling of its Lifetime Value metric to $1.2 billion and an improvement in its churn levels
The strong form continues in FY 2020.
Pleasingly, this strong form has continued in FY 2020, which could be good news for the Nearmap share price.
At its annual general meeting last month, Nearmap revealed that it expects to deliver group ACV in line with analyst consensus estimates.
This is a range of $116 million to $120 million, which represents growth of 28.6% to 33% on FY 2019's $90.2 million.
Management did warn, though, that the second half will be the stronger of the two. This is due to evolving industry dynamics which are creating new opportunities for growth in the second half.
In addition to this, its North American sales and marketing investment is ramping up and the returns are expected to accelerate in the second half.
Is the Nearmap share price in the buy zone?
Based on the current Nearmap share price and a total of ~451 million shares outstanding, Nearmap has a market capitalisation of just under $1.2 billion.
This means its shares are changing hands at around 10x forecast FY 2020 ACV. Whilst this makes it quite expensive, I believe the company is deserving of its premium valuation.
This is due to its very strong long term growth potential thanks to its leadership position in a massive and growing global market.
Overall, I think it could be a great long term investment along with fellow tech shares Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).
