It's the WAAAX cohort that dominates the minds of investors when it comes to investing in the ASX tech sector.
But there're attractive opportunities outside of these market darlings that shouldn't be ignored.
WAAAX refers to WiseTech Global Ltd (ASX: WTC), Afterpay Ltd (ASX: APT), Altium Limited (ASX: ALU), Appen Ltd (ASX: APX) and Xero Limited (ASX: XRO).
Market darlings getting all the attention
The WiseTech share price is in the spotlight as it was the best performer on the S&P/ASX 200 Index (Index:^AXJO) yesterday with its 16.8% surge to $16.09.
The Afterpay share price is also widely celebrated for its amazing 200% bounce since the bear market trough a month ago.
Those looking for value buys in the tech sector should also cast their eye outside of WAAAX as there are two overlooked names with big upside potential.
Sounding sweet
One stock that Morgan Stanley thinks should be on your buy list is the Audinate Group Ltd (ASX: AD8) share price.
The company makes networking solutions for audio and video equipment that is used in for live concerts. This is obviously an activity that came to an abrupt stop due to the global COVID-19 pandemic.
This will drag on Audinate's earnings but some projects to install Audinate's Dante system are going ahead. Some large venues like Disneyland are also pulling forward installation works during this downtown.
Worth suffering the short-term pain
"The cycle does not change AD8's solid audio industry position and we think c.30% growth medium term is sustainable," said the broker.
"One of the main push backs from investors has been valuation. AD8 trades 11x trough FY21e sales and we see the recent share price falls as an opportunity to purchase a long dated structural grower at cycle lows."
I hold the stock and I can't agree more. Those willing to endure the shorter-term pain for longer-term gains should take a closer look at Audinate.
Morgan Stanley reiterated its "overweight" recommendation on the stock with a price target of $7.50 a share.
Good advice
Another stock in the IT sector that most leading brokers like is Praemium Ltd (ASX: PPS). The wealth management platform company released its quarterly update on funds under advice (FUA).
While it was overall a weaker quarter for Praemium as its business is also being impacted by the coronavirus fallout, Goldman Sachs reaffirmed its "buy" rating on the stock.
"Although the majority of revenues earned by the platforms are linked to FUA, we would expect the impact of weaker equity markets to be softened by tiered pricing arrangements, and higher transactional fees in the near term," said the broker.
"We also note that PPS also operates subscription based software products and administration services, which account for c.42% of FY19 revenues and continue to be unaffected by the weaker equity markets."
Goldman Sachs lowered its 12-month price target on the stock to 55 cents a piece. This leaves room for Praemium to nearly double in value over the period.
