The uncertainty around the duration and economic repercussions of the pandemic will continue to be a near-term risk for all investments. However, here are three phenomenal ASX tech plays that represent strong medium to long term investments.
1. Altium Limited (ASX: ALU)
Altium is a household ASX 200 tech name in the electronics design software space for engineers who design printed circuit boards. The company’s share price is some 30% off its all-time highs back in February and has shown early signs of consolidation in the past two weeks, around the $27-$28 mark.
China has been a key driver in Altium’s growth story, delivering record revenue growth of 27% in the most recent half and continuing to scale. This could be a headwind for Altium’s growth given China’s circumstances.
Despite the short-term headwinds for Altium, the company has a suite of high-quality clients in a diverse range of sectors from automotive to life sciences. Altium has also launched its Altium 365 platform, providing users with free and paid collaboration, design-sharing and data management.
2. Data#3 Limited (ASX: DTL)
Data#3 is a leading Australian IT professional services firm helping firms maximise the value of their technology investments. The company delivered a strong 1H20 result with revenues growing 11.6% and net profit after tax soaring 41.5%. This growth in profits is attributed to strong growth in software licensing and public cloud revenues, and a decrease in consulting revenue.
The company has largely been able to operate normally. It announced that as of late March, “over 90% of the Data#3 workforce is operational from home”. I believe Data#3 is still poised for growth and has a moderate price-to-earnings ratio of 30.
3. Megaport Ltd (ASX: MP1)
The narrative for data centres, cloud and connectivity services remains as strong as ever despite the pandemic. In fact, this is exactly when their services are needed – to speed up your setup and simplify the process of building and deploying connections to the services your business runs on.
Megaport has an ever-growing global ecosystem of installed ‘ports’ including North America, Asia Pacific and more recently, a launch in Japan – which had the 5th largest global cloud spend in 2019. Despite the uncertainty, I believe that data centres will continue to experience strong demand.
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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Data#3 Ltd. and MEGAPORT FPO. 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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