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Are Afterpay and the WAAAX shares good value?

The ‘WAAAX’ group of ASX shares have been some of the hottest growth shares in recent years. Led by Afterpay Ltd (ASX: APT), this group has rocketed higher and charged into the S&P/ASX 200 Index (INDEXASX: XJO).

The hard part with growth stocks is picking when they’re good value and when they’re overpriced. So, where do the WAAAX shares sit at the moment?

Are the WAAAX shares good value right now?

Afterpay recently smashed through the $40 barrier last week. Despite strong growth from all 5 tech stocks, I think Afterpay could be the pick of the lot.

The Afterpay share price is up 107.43% in the last 12 months and could climb higher. The buy now, pay later group could surge higher if its February results outperform yet again.

Afterpay’s share price fortunes have been in contrast to fellow WAAAX share, WiseTech Global Ltd (ASX: WTC). The WiseTech share price is up 389.38% since the start of 2017 but has edged lower in the last 6 months.

WiseTech has been in an ongoing battle with US-based short seller, J Capital Research. The short seller has gone after WiseTech and accused the group of overstating profits by $116 million over 3 years.

The Xero Limited (ASX: XRO) share price could be the best value buy of the WAAAX shares right now. Xero shares are up 405.06% since the start of 2017 and are trading at $85.76 per share at the time of writing. 

Xero is a leader in the accounting software space and continues to sign big clients. Xero has a decent moat around its business and could be a real outperformer in 2020.

Appen Ltd (ASX: APX) and Altium Limited (ASX: ALU) are the other two WAAAX shares that have delivered strong returns for shareholders. The Appen share price is up 774.4% since the start of 2017 and boasts a market cap of $3.10 billion.

Altium shares have rocketed 408.05% since the start of 2017 and have been another super performer. The group’s shares are yielding 0.82% which is a real bonus on top of strong capital growth potential.

Is now the time to buy?

I think the key with growth shares like the WAAAX group is to pick the right time to buy. I like to invest in cash flow positive companies with strong earnings.

However, there’s no doubting the returns that shareholders have seen in recent years. If the WAAAX companies can outperform expectations again in February, I think these shares could be in the buy zone in 2020.

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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 AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia owns shares of Altium, Appen Ltd, and Xero. 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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