In early March, analysts at Macquarie Group Ltd (ASX: MQG) made a statement, believing "investors will be drawn back to Tech" following the bear market created by COVID-19.
This was based on COVID-19, despite being worse than SARS, following a similar playbook with technology companies leading the SARS market rebound.
With that in mind, below are three ASX tech shares to consider buying in April in anticipation of the recovery.
Audinate Group Ltd (ASX: AD8)
The Audinate share price has been crushed since the beginning of the bear market. At one point, it was down to just $2.51 per share, a staggering 70% below its February highs. Since then, Audinate has followed the market back higher to sit at $4.12 at the time of writing. However, this is still more than 50% lower than its February highs of $8.50 a share.
Who is Audinate?
Audinate is a leading provider of professional digital audio networking technology. Its Dante platform allows distribution of uncompressed, multi-channel digital media over a standard ethernet network with near zero latency. This means heavy expensive cabling is no longer required, with existing networks sometimes able to be taken advantage of.
Audinate's first-half results showed a 3.8 percentage point increase in gross margin to 77.1%, driving its gross profit 20% higher over the prior corresponding period. The company has not yet released an announcement in response to COVID-19 but has a strong cash position on its balance sheet to help it navigate the turbulent waters.
NEXTDC Ltd (ASX: NXT)
NEXTDC is an S&P/ASX 200 Index (ASX: XJO) company that provides data centre outsourcing, connectivity services and infrastructure management software.
Unlike most ASX shares during March, NEXTDC actually saw its share price rise, posting a 13% gain for the month. After reporting strong half-year results at the end of February, NEXTDC shares continue to perform well as isolation and social distancing measures increase demand for video calls and cloud-based software.
Recent announcement
NEXTDC announced this morning a trading halt for its shares as the company looks to raise $672 million. With strong growth recently, these funds are to be used to continue growing the business. It appears management has timed the capital raise well with its shares sitting at a high. Meanwhile, other companies such as Webjet Limited (ASX: WEB) are forced to raise capital at deflated prices.
I think NEXTDC will continue to see a growing demand for its services. Raising capital during a time of share price strength is a smart move to capitalise on its growth prospects. Once NEXTDC shares return to trading, I wouldn't be surprised to see the share price drop closer to the issue price, providing a better opportunity for investors.
ETFS Morningstar Global Technology ETF (ASX: TECH)
If you believe a particular sector will rebound strongly but are unsure which company to invest in, an ETF can provide great diversification across an industry.
An investment in the ETFS Morningstar Global Technology ETF provides investors with global exposure to the technology sector. Companies within this ETF are chosen based on Morningstar's MOAT methodology. This method selects companies that are market leaders with distinct competitive advantages. The TECH ETF is largely invested in US tech shares, with smaller investments in Japan, Germany, Switzerland, Israel and France as of April 1, 2020.
