If you are looking to get into the fast-paced ASX tech sector, here are 3 top quality companies to choose from that I think have great futures ahead of them.
Appen Ltd (ASX: APX)
Appen has had a great run on the share market over the past 2 weeks with the Appen share price up by 19% to $26.32 at the time of writing.
Appen is the global leader in the development of datasets for machine learning and artificial intelligence (AI). It services major technology companies, automakers, and governments and continues to grow at an extremely fast pace. For the first half of its financial year ending June 2019, revenue was up 60% to $245 million, with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 81% to $46.3 million.
Appen continues to experience strong demand from many of the largest global technology firms, which has translated into very high revenue growth, assisted by recent acquisitions.
I believe Appen is very well placed to see continued strong growth during 2020 and throughout the next decade, due to rising demand for AI products and growing machine learning markets.
Xero Limited (ASX: XRO)
Xero is an online accounting software provider for small businesses that has seen amazing growth over the past 10 years. In my opinion, this strong growth looks set to continue over the long term.
One of Xero's key differentiators is that it is affordable and user-friendly, which makes it ideal for small businesses. In comparison, some of its competitors' products can be expensive and more complex to use.
In its half year earnings to 30 September 2019, Xero's operating revenue was up 32% to NZ$338.7 million, while EBITDA was NZ$65.9 million, almost double that of H1 FY19.
While it took more than a decade to add Xero's first million subscribers, it added its next million in only two and a half years, demonstrating the increasing pace of Xero's adoption both locally and across a growing number of overseas markets.
Afterpay Ltd (ASX: APT)
This leading buy-now, pay-later (BNPL) provider continues to display strong growth in Australia and New Zealand, although Afterpay is facing growing competition from other BNPL providers such as Zip Co Ltd (ASX: Z1P) and newcomer Openpay Group Ltd (ASX: OPY).
The Afterpay share price has soared since being listed on the ASX in 2017 – during the past 12 months alone the share price is up by 128% to $34.82 at the time of writing.
Afterpay is making strong progress on its international expansion strategy into the United States and has recently entered the United Kingdom. The company has also recently moved into healthcare services.
I believe it has strong potential to leverage the data it collects for targeted advertising (similar to tech giants Facebook and Alphabet) and provide retailers with consumer insights on how to grow their sales further.
